The Spaniard, who has now failed go beyond the quarter-finals at any of the four grand slams in 2014, delivered an erratic display as he succumbed to a 6-3 3-6 6-1 6-3 defeat at Flushing Meadows.
Having received a walkover into the last 32 after Bernard Tomic withdrew from the tournament, many would have expected a fresh Ferrer to dominate proceedings at the Louis Armstrong Stadium court.
Instead, it was Frenchman Simon who dictated the play to qualify for the last 16 at the US Open for only the second time in his career.
After losing a first set in which he committed 20 unforced errors, fourth seed Ferrer appeared set to launch a comeback after taking the second with a more disciplined showing.
But the 2013 French Open finalist could not carry that momentum forward and allowed Simon to re-establish control in the third set, which the 26th seed won inside 31 minutes.
And the normally obdurate Ferrer soon began to fade in the fourth, Simon breaking serve for the seventh time before sealing success on his third match point as Ferrer hit into the net with his 52nd unforced error of the contest.
Simon will now face either Marin Cilic or Kevin Anderson in the next round as he bids to replicate his performance at the 2009 Australian Open and reach just his second grand slam quarter-final.