Devvarman, who upstaged world number 26 Guillermo Garcia-Lopez in the second round yesterday, lost 3-6 6-3 6-4 to the 36-ranked Tipsarevic.
The 71st-ranked Indian made his fancied Serbian opponent toil hard for 2 hours, 38 minutes and 45 seconds to book his place in the semi-finals of the clay court event.
Tipsarevic will now face the winners of another quarter-final between top seed Novak Djokovic and Blaz Kavic.
Somdev, who broke into top-100 early this year, had scored a thrilling 7-6 (6) 2-6 7-6 (8) win over Garcia-Lopez in the second round.
The win over the Spaniard was Somdev's first win over a top-30 player this year and would further enhance his reputation as a new force on the ATP circuit.Somdev had defeated Ivo Karlovic, then world number 25, in 2009 Chennai Open to record his best win.
Recently, Somdev had played his heart out against world number one Rafael Nadal and world number six David Ferrer before losing.