Top-ranked Pete Sampras beat Michael Chang 6-4, 6-3 and will face Ivanisevic in the semifinals.
Ivanisevic's 6-4, 6-1 victory took only 58 minutes.
Ivanisevic is serving a two-month suspension from the ATP Tour for accumulating too many fines for code of conduct violations. He became the first player to be banned after an outburst at last month's ATP Tour World Championship in Frankfurt.
He was allowed to play at the Grand Slam Cup because the ATP considers the event an exhibition. The $6 million tournament is the most lucrative in the world and Ivanisevic earned $425,000 for reaching the last four.
The event invites players with best records at the four Grand Slam tournaments -- the Australian, French and U.S. Opens and Wimbledon.
Ivanisevic lost his temper quickly Thursday and was given a warning by umpire Bruno Rebeuh in the fourth game. Ivanisevic smashed his racket to the ground and raced toward the umpire swearing, after a linesman failed to call a shot by Becker that seemed clearly out. Ivanisevic still managed to save three break points in that game.
"I said something bad and I deserved the warning. But that ball wasn't even close. I lost my temper a bit but I played better and better after that," Ivanisevic said.
The Croat served 15 aces in demolishing third-ranked Becker, who lives in Munich and who was the favorite of the 11,000 fans in the Olympic Hall.
"He was simply tremendous" Becker said. Ivanisevic "never gave me a chance to get back into the match."
Sampras also displayed an impressive array of shots, beating Chang in every aspect of the game. He served well, hitting 13 aces, came in for brilliant drop volleys and matches Chang's ground strokes from the baseline.
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