Serbian world number one Djokovic was brutally dominant as he pulverised the Spanish fourth seed 6-2 6-2 6-1 in 89 minutes in Rod Laver Arena to race into Sunday's final against Roger Federer or Andy Murray.
"This was definitely one of the best matches of my career," he said. "Tonight I just played incredible."
China's Li could only be less convincing despite the impressive 6-2 6-2 win over Russia's 2008 champion Maria Sharapova but it was the second women's semi-final that provided the main talking point of the day.
There was no doubt that defending champion Azarenka was a worthy 6-1 6-4 winner over American teenager Sloane Stephens but the spectre of gamesmanship was raised when the Belarussian took a lengthy medical timeout after failing to convert five match points.
Image: Serbia's Novak Djokovic celebrates after defeating Spain's David Ferrer in their semifinal match at the Australian Open tennis championship in Melbourne, Australia, Thursday, Jan. 24, 2013.