Gade, who had never before lost a singles match at the European Championships, was shown the door by local lad Henri Hurskainen (left), who scored a stunning 21-19, 12-21, 21-19 victory.
He will now play former world junior champion Viktor Axelsen in the semi-finals after the Dane ousted Dieter Domke of Germany 21-17, 21-14.
The other semi-final will be between Germany’s fourth seed Marc Zwiebler and second seed seeded Dane Jan O Jorgensen.
“I cannot believe this. This is without exception the greatest moment of my badminton career and to beat the best player in Europe on my home soil is really mind blowing,” Hurskainen told Badminton Europe.
“I knew even when I was so far behind in the third that I still had a chance and inside I just stayed focused and calm. The big challenge now is to stay in the present and get ready for the semi-final as I want more than a bronze for me and for Swedish badminton.”
The second blow of Denmark came when Poland’s Robert Mateusiak- Nadiezda Zieba showed top seeds Nielsen-Pedersen (right), the door with a comprehensive 21-17, 21-10 victory.
They will now play Britain’s Chris Adcock-Imogen Bankier, who edged fellow Brits Nathan Robertson-Jenny Wallwork 18-21, 21-19, 22-20.
Nielsen-Pedersen’s defeat has paved the way for former world champions Thomas Laybourn-Kamilla Rytter Juhl to win the gold medal after they eased into the last four where they will meet teammates Mads Pieler Kolding-Julie Houmann.
Denmark are still on course to make a clean sweep of all the titles as Tine Baun (women’s singles), Mathias Boe-Carsten Mogensen (men’s doubles) and Pedersen-Juhl (women’s doubles) have all qualified for the semi-finals.
For full results, click here.