McDowell made his par putt on the first extra hole from 5 feet but Garcia's putt slid by the cup from even closer in.
''We are in Spain and it wasn't exactly 'el clasico' but I got the job done,'' said McDowell, who holed the winning putt for Europe at the Ryder Cup in 2010.
McDowell will play another Spaniard in the semis after Rafael Cabrera-Bello rallied from 3 down to win 3 and 1 against compatriot Alvaro Quiros, who had earlier ended reigning champion Ian Poulter's eight-match unbeaten run in the event.
Colsaerts, a semifinalist here last year and whose big-hitting game appears ideally suited to the long, hilly Finca Cortesin course in southern Spain, beat Brandt Snedeker of the United States 4 and 3.
Lawrie thrashed Retief Goosen 6 and 5 in their quarterfinal as he bids to mark his 500th appearance in a European Tour event with his eighth tournament victory.
McDowell beat Richard Finch – the conqueror of top seed Martin Kaymer in the group stage – 3 and 2 in the last 16 earlier Saturday and lost a great chance to clinch his match against Garcia in regulation.
The Northern Irishman, who won the U.S. Open in 2010, missed a putt from five feet on No. 18 to lose the hole and take the match to a playoff.
Garcia slipped when taking his second shot on the 19th hole, his ball squirming along the fairway and landing beside the same bunker McDowell found himself in from his second.
Garcia was closer with the approach but he managed to 3-putt from 15 feet whereas McDowell needed only two from the length of the green.