The seven-time champion had the tip on his cue changed overnight, having labelled it as “awful” ahead of the last-four clash with Zhao at the Crucible.
The Englishman had still emerged from the first session level at 4-4, but lost all eight frames on Friday morning as Zhao ruthlessly punished every missed pot and poor safety.
The 28-year-old left-hander now needs just five more frames to book his place in the final against either Judd Trump or Mark Williams after inflicting only the fourth session whitewash of his career on a shellshocked O’Sullivan.
Zhao made breaks of 57 (twice), 112 and 82 to establish an 8-4 lead, with O’Sullivan scoring just 50 points in those four frames and recording a highest break of 23.
There was no respite for 49-year-old O’Sullivan after the mid-session interval as Zhao made breaks of 67 and 115 to extend his lead, with O’Sullivan then missing a yellow off the spot in the next frame to allow his opponent back to the table.
Zhao needed two opportunities to take the frame and also took the last of the session with a break of 87 after O’Sullivan had inexplicably missed a simple blue to the middle pocket.
Former UK Championship winner Zhao is playing as an amateur in Sheffield as he continues his comeback following a 20-month ban for his involvement in a betting scandal.
In the other semi-final, Williams fought back from a four-frame deficit against Trump to level their semi-final at 8-8.
Trump resumed 5-3 ahead from Thursday’s session and looked like maintaining control after winning the first two frames of the day.
But Williams replied with breaks of 105 and 84 before edging a scrappier 13th frame to trail 7-6.
Trump took the next frame but Williams shaded a tense 15th, sealing it on the last pink.
A superb 96 clearance from the Welshman ensured parity going into Saturday morning’s session. (AFP)
