The Australian had built on his run to the Wimbledon final by winning an ATP title in Washington last week and went into the clash having won 15 of his last 16 matches.
Kyrgios looked weary, but recovered from losing the opening set on a tie-break to turn the tables in the second.
The deciding set was one-sided, though, with Kyrgios ranting at the umpire about a lengthy bathroom break taken by Hurkacz and struggling physically as he fell to a 7-6 (4) 6-7 (5) 6-1 defeat.
Kyrgios told a press conference: "My body hasn't been feeling great the last week. When you stop playing for five, 10 minutes, it doesn't help your body.
"My body was so stiff after that I couldn't move properly. My abdominal was hurting. It's within the rules so I'm not going to complain, I just completely stiffened up."
In the semi-finals, Pole Hurkacz, who is the only player left to have previously won an ATP Masters title, will take on fourth seed Casper Ruud.
The Norwegian made it a miserable day for home hope Felix Auger-Aliassime, handing the young Canadian the heaviest defeat of his career as he slumped to a 6-1 6-2 loss.
The second semi-final will see Great Britain's Dan Evans take on Pablo Carreno Busta.
Evans reached his second ATP Masters semi-final after fighting back from a set down to defeat American Tommy Paul 1-6 6-3 6-4.
"You wonder if it's going to happen, if you are going to get into the match, and I got in," said Evans.
"When I got ahead I really took it to Tommy and that's been sort of my way throughout this week so far, and I went about it in a good way, I was fired up and I thought it was a good battle between me and Tommy," Evans said.
Carreno Busta advanced after knocking out the other British challenger in Montreal, Jack Draper.
The 20-year-old Draper scrapped hard but the Spaniard dominated throughout to win 7-6 (4) 6-1, with his younger opponent left to appreciate a week in which he reached his first Masters quarter-final and took down world number five Stefanos Tsitsipas.
In the women's event in Toronto, Simona Halep continued her resurgence by overcoming Coco Gauff 6-4 7-6 (2) to reach the semi-finals, maintaining her record of not having dropped a set in four meetings with the American teenager.