Perhaps weighed down by expectation from the most populous nation in the world and with an estimated 100 million people watching on television in China, Li had a shaky start, serving a double fault on the first point and having her serve broken.
The world number six, however, bounced straight back to the delight of the overwhelmingly pro-Li crowd in Rod Laver Arena and used her powerful forehand to break Azarenka twice to hold a 3-1 lead.
Azarenka battled back to break to reduce the deficit to 3-2, but was broken again by Li, who was relentlessly attacking the Belarusian's serve.
Azarenka was able to hold for the first time in the eighth game and break in the ninth, but Li broke again on her fourth set point when the Belarusian double faulted to take the first set 6-4.
Azarenka finally found her range with her ground strokes in the second set and moved a lot better to race out to a 3-0 lead.
Li broke back, but then badly hurt her ankle after she was forced to change direction to try to reach an Azarenka backhand volley.
In Image: Victoria Azarenka , left, of Belarus is congratulated by China's Li Na