After dominating its first six games and blowing out France by 24 points in the group phase, Spain appeared to be the main candidate to dethrone the United States in a possible final that would have been a rematch of the past two Olympic gold-medal games.
But France defended well and rebounded even better to ruin Spain's quest for a title for a second straight summer.
Last summer, Tony Parker helped France end Spain's quest for a third consecutive European title.
This time, Spain had several reasons to believe it would avenge that loss. Parker wasn't playing for France, and Spain had Pau Gasol back in its ranks, besides playing at home.
"It's a painful and disappointing defeat," Pau said. "We had such high expectations and had played so well until now."
Spain had averaged 88 points per game through its first six wins, all blowouts. But France cut off Spain's passing lanes and forced it into solo efforts.
Spain's guards didn't adjust by looking for Pau and Marc Gasol in the post enough, and then compounded that by missing all but two of their 22 attempts from beyond the 3-point arc.
"Everyone thought we had won this before it started, but we didn't prepare well for the game and were trying to play catchup the entire way," Spain guard Juan Carlos Navarro said. "They prepared better than we did. We relied on doing what we always do, defend and get out on the break, but our shots didn't fall, and they played with a lot of poise."
Boris Diaw scored 15 points and Thomas Heurtel added 13 for a France team which pulled in 50 rebounds to Spain's 28.
Pau had 17 for Spain, but his brother Marc and Serge Ibaka each went 1-of-7 from the field to combine for just 5 points.
Serbia awaits France on Friday after it routed Brazil 84-56 in the other quarterfinal.
The U.S. plays Lithuania in the other semifinal in Barcelona on Thursday.
Pau scored in the post to spark Spain's 12-4 run to open the third period and edge ahead 40-39.
A brief scuffle marred that span when France's Florent Pietrus slapped Sergi Llull in the back of the head after an argument. Pietrus was awarded an unsportsmanlike technical foul.
Spain entered the final period with a one-point lead but without any clear plan of attack.
Diaw nailed a backbreaking 3 after France again beat Spain to the offensive boards to take a 51-45 lead and force Juan Orenga to call time-out with 6:41 left.
A contested jumper by Pau brought Spain to within three points with under two to play, but Heurtel scored five points to quash the comeback and spark chants for Orenga's resignation in a loss that hurt almost as much as the Spanish football team's early elimination from this summer's World Cup.
Pau left open the possibility that this was his last game for Spain, which he has led to one world championship in 2006, two Olympic silver medals, and two European titles.
"You never know when your last game or tournament will be," the new Chicago Bull center said. "I would like to play until I am 50, but I doubt it. We have great young players coming up and I'm sure that we have a good team in the future."
Whether or not Pau continues, Spain will likely not have such a chance to try and finally beat the U.S. with Pau now 34, and the Olympics two years away.
Serbia's result also reversed a group matchup, as Serbia lost to Brazil last Wednesday, when Spain also beat France.
This time, Brazil and its trio of NBA centers in Varejao, Tiago Splitter and Nene were ineffective, as Serbia bettered the bigger Brazilians inside and out, and turned a five-point halftime advantage into a rout by outscoring Brazil 29-10 in the third period.
Serbia was led by guard Milos Teodosic, who scored 23 points, hit three 3-pointers, and made four assists. Shooting guard Bogdan Bogdanovic scored 12 points, and centers Miroslav Raduljica and Nenad Krstic added 10 each.
Varejao and Vieira had 12 points each for Brazil.
Spain Bounced By France
France defeats Spain 65-52 to advance to face Serbia in the semifinals of the 2014 FIBA Basketball World Cup.