Seeking his third title at Indian Wells, No. 3-seeded Nadal withstood Isner's serve-and-volley game under the searing afternoon sun in front of a partisan crowd backing one of only two American men remaining.
Nadal ended things with a forehand winner into the open court, prompting a huge yell out of the Spainard.
No. 7 Andy Roddick met 22nd-seeded Jurgen Melzer of Austria in a night match, followed by No. 14 Andy Murray against Nicolas Almagro of Spain.
Djokovic, the highest seeded men's player remaining at No. 2, lost 7-5, 6-3 to 20th-seeded Ivan Ljubicic of Croatia, a day after top-ranked Roger Federer dropped a third-set tiebreaker to Marcos Baghdatis after holding three match points.
The fourth-seeded Dementieva struggled with her footwork in a 6-4, 6-3 quarterfinal defeat to No. 5 Agnieszka Radwanska of Poland, who has yet to drop a set in four matches.
"If it's an important moment, I think I'm just little bit better," Radwanska said. "That's why I'm winning in two sets."
Dementieva's loss cleared the way for a new women's champion to be crowned Sunday.
Ljubicic hadn't beaten Djokovic since their first meeting in 2006, losing five in a row.
Playing on Stadium Court 2, Djokovic held for 5-all in the first set. But Ljubicic won the next two games, breaking Djokovic to take the set 7-5. Ljubicic smashed 13 aces and had no double faults in the nearly 2-hour contest.
Djokovic's serve continued to let him down in the second set. He was broken to trail 4-3 before Ljubicic won two of the next three games to close out the win. Djokovic saved just one of seven break points against him in the match.
"This is a tournament where I definitely didn't feel comfortable on the court. I had a very tiring couple of weeks coming from Davis Cup, which was emotionally very exhausting for me," Djokovic said. "I had to travel the next day and came here. I know I could have played better."
Ljubicic moves on to a quarterfinal against No. 21 Juan Monaco of Argentina, who got by Guillermo Garcia-Lopez of Spain 3-6, 6-2, 6-1.