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Osaka, who also beat Williams in the chaotic 2018 U.S. Open final, reached her fourth major title match and stretched her winning streak to 20 matches.
The No. 3-seeded Osaka also won the U.S. Open last year, along with the Australian Open in 2019.
On Saturday, at 7:30 p.m. local time (3:30 a.m. EST), Osaka will meet a first-time Grand Slam finalist for the championship. No. 22 Jennifer Brady of the United States was scheduled to face No. 25 Karolina Muchova in Thursday’s second semifinal.
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Djokovic is seeking a ninth Australian Open title and 18th Grand Slam trophy overall.
Rafael Nadal — who lost in the quarterfinals to Stefanos Tsitsipas after blowing a two-set lead — and Roger Federer are tied for the men’s record of 20.
Spectators were back in the stands at Rod Laver Arena on Thursday after they were barred from attending the tournament for five days during a local COVID-19 lockdown. About 7,000 people were allowed into the stadium for Williams-Osaka, roughly half of capacity.
Ushers walked through the aisles at changeovers to remind fans they needed to wear a mask or over their nose and mouth.
On the hottest day of the hard-court tournament so far — 85 degrees Fahrenheit (30 Celsius) — Osaka got out to a shaky start, perhaps prodded into pressing in her opening service game by a booming cross-court backhand return winner from Williams on the match’s second point.
That was followed by a double-fault, a wild forehand and, eventually, a netted backhand that handed over a break. Quickly, Williams went up 2-0, then held another break point with a chance to lead 3-0 after another double-fault by Osaka.
Didn’t take long for Osaka to right herself, however.