Dominic Thiem saw off the big-serving German 7-5, 6-3 after Greece's Stefanos Tsitsipas, making his ATP Finals debut, had earlier beaten Roger Federer.
Rafael Nadal exited the ATP Finals but ended his season as the world number one and with a chance to lead Spain to Davis Cup glory.
Rafael Nadal has never won the end-of-season tournament and had a miserable start at the O2 Arena, being outplayed by Germany's Alexander Zverev.
The "Big Three" remain the men to beat at the season-ending ATP Finals in London.
Alexander Zverev described his 7-6 (9/7), 6-4 loss to Taylor Fritz as 'flat' as he was knocked out of the ATP Swiss Indoors.
Daniil Medvedev defeated Alexander Zverev 6-4, 6-1 in the Shanghai Masters final
With Roger Federer and world number one Novak Djokovic ousted in the quarter-finals, the next generation of men's tennis stars has made its mark in China.
Roger Federer was penalised after twice hitting the ball out the court in anger.
Roger Federer delighted his home fans alongside Alexander Zverev, as the European pair saw off Shapovalov and Sock after a dramatic second set.
Rafael Nadal, second seed, produced some electrifying moments of brilliance to end the challenge of Croatia's Marin Cilic 6-3, 3-6, 6-1, 6-2 at the US Open.
Rafael Nadal, who won his fourth title in Canada a year ago, needed almost two hours on Friday to overcome the Italian veteran who shocked him on clay at Monte Carlo in April.
Andy Murray hasn't played singles since the Australian Open but says he might return at the ATP Cincinnati Masters starting August 12.
Alexander Zverev served nine double faults in a rollercoaster match, and survived two match points in the third set before ultimately losing in the tiebreaker.
Novak Djokovic will now face either ninth-seeded Italian Fabio Fognini or fifth seed Alexander Zverev.
Alexander Zverev extended his terrible clay-court run, falling 7-5, 7-5 to Italian wild card Matteo Berrettini in the second round.
Rafael Nadal has endured a turbulent few weeks after slipping to defeats in Monte Carlo and Barcelona last month before being hit by a stomach bug on Sunday.
Roger Federer is making his return to clay at the Madrid Open this week after three years' absence.