The 21-year-old from Cheltenham lost 5-4 to the 2005 world champion who won the final three frames. On the other table, world number one Selby demolished Mark Williams 5-1.
World number 37 Lisowski, in his first ranking event quarter-final, showed no signs of serves by taking the opener via a 62 break.
But Murphy hit back with a run of 137, the fourth highest of the tournament, before stealing the third frame via an outrageous fluke on the black.
However Lisowksi levelled going into the interval with a 71 break and took the next two frames to move within a frame of the last four.
Murphy hit back to draw even at 4-4 and Lisowski, who beat Mark Davis in a decider on Thursday, could not repeat the feat as he missed a green to allow the Magician to make a match-winning break.
Williams, Crucible king in 2000 and 2003, rattled home a 54 break to level his match against Leicester's Selby at 1-1 before losing four frames in a row.
Selby produced a break of 64 to pinch the fourth and then a 72 to seal the match as he looks for his second ranking event victory of the year after winning the UK Championship.
Stephen Maguire joined them in the last four with a convincing 5-1 victory over Stuart Bingham.
The Scot edged a 9-8 thriller between the pair in the final of the Welsh Open last month but this was an easier ride with a 102 break in the opening frame setting him in motion.
He extended that lead to 3-0 and although the Essex cueman pulled one back going into the interval. a 73 run restored Maguire's advantage before he rounded out the victory.
He will play Neil Robertson who produced a superb performance of break-building in beating Marcus Campbell 5-2.
The Australian had breaks of 87 and 89 but was still level at 2-2 going into the interval.
Although additional runs of 50 and 113 saw him surge ahead before completing the job to set up a Saturday meeting with Maguire.