Thiem, who had stunned Swiss legend Roger Federer in straight sets last Sunday in his first match in Group Bjorn Borg, came from behind to defeat Djokovic 6-7 (5), 6-3, 7-6 (5) on Tuesday evening.
"This was really one of these special matches, what I've practised all my life for, all my childhood for," Thiem was quoted as saying by the ATP Tour website. "Really epic one in an amazing atmosphere, beating a legend of our game. And also I've qualified for the semi-finals, which is the best," he added.
Meanwhile, Djokovic said that Thiem deserved to win. "I thought he deserved to win. He just played very courageous tennis and (was) just smacking the ball. He went for broke," Djokovic said.
"The entire match he played same way he played the last point. I have to put my hat down and congratulate him, because he just played a great match."
The loss keeps Djokovic, the World No. 2, 440 points behind No. 1 Rafael Nadal in the battle for year-end No. 1 in the ATP Rankings.
Earlier, Federer recovered from his disastrous start at the ongoing tournament and defeated Matteo Berrettini from Italy 7-6 (2), 6-3. As the six-time champion lost his first match to Thiem, he has to now defeat Djokovic on Thursday to reach the semi-finals.
( With inputs from IANS )