The Dutchman was never behind after breaking in the very first leg, but having established a commanding 8-4 lead was pegged back to 9-9 - with Taylor now holding the darts.
Van Barneveld regathered himself to begin the final leg with throws of 131 and 180, his third maximum of the match, before holding his nerve to hit double eight with Taylor waiting on 40.
This was not a match of the quality this pair have produced so often down the years, with neither able to reach an average of 95, but what it lacked in scoring it made up for in tension.
Taylor, a winner in Melbourne last week, had been favourite before coming unstuck in what will be one of the last battles with the man who has tried to keep pace with him for so long.
"I can’t do things the easy way at the moment," joked van Barneveld after the match.
"It’s always nice to beat Phil, he is the greatest player of all time but I could have made that much simpler for myself,
"I struggled with the crowd who were on his side but that isn’t an excuse and I’m just happy to make it though to the semi -finals."
James Wade was the first man through to the semi-finals as he beat Michael Smith 10-5.
Wade took out 140 to move into a 2-0 lead and soon made it 3-0 on his favoured double 10.
Smith won leg four and kept in touch at 4-2 and 5-3, but was never any closer as his opponent marched into the last four.
The highlight for Smith was a 126 checkout in a quality encounter but Wade, who averaged 101.05, was ultimately too good for the former World Youth champion.
"It’s always hard playing a friend and Michael is certainly a friend. I have my critics and I know I bite sometimes when I shouldn’t but it is nice to answer them every now and again,” said Wade.
Hopes of a home winner were ended by Gary Anderson, who accelerated away from Simon Whitlock in a 10-5 victory.
Whitlock was behind early but, having levelled at 4-4, moved ahead for the only time in the match by holding throw in the ninth leg.
Anderson responded with a 110 checkout and maximums in each of the next three legs saw him take command.
The two-time world champion saved his best for the final leg as a 144 checkout saw him march into the semi-finals thanks to an impressive display.
"That 110 checkout on double 15 was huge, it’s not a double you want to leave but with the way Simon was playing I needed to hit it," Anderson refelected.
"Simon has been playing well recently so that worked as a good kick in the backside for me and hopefully sets me up nicely for tomorrow."
The final game of the evening saw an in-form Daryl Gurney get the better of Peter Wright 10-4 and progress to the last four, continuing his golden summer.
Gurney only missed four shots at a double during his victory to add to the 100% record he achieved the night before.
With the score at 5-4 in Gurney’s favour the Northern Irishman produced an incredible streak of finishing to win the next five legs to seal the win.
The run included finishes of 97, 32, 93, 104 and 87 on the bullseye as well 16 on double eight to confirm his spot in the semi-finals.
"The finishing was brilliant again today, my scoring wasn't as good as it normally is but if I finish like that I'll take some stopping," Gurney observed afterwards.
Saturday August 26 (1900 local time, 1200 BST)
Quarter-Finals (Best of 19 legs)
James Wade 10-5 Michael Smith
Gary Anderson 10-5 Simon Whitlock
Phil Taylor 9-10 Raymond van Barneveld
Peter Wright 4-10 Daryl Gurney
Semi-finals
Gary Anderson v James Wade
Raymond van Barneveld v Daryl Gurney
Fast Results
Scores
