The Williams' youngest is looking for her 23rd Grand Slam title, leaving her the only professional record holder before Steffi Graf (22) and closer to Australian Margaret Court's all-time record. The last final she played in Melbourne was in 2003, when she lost to her sister.
Venus Williams is back in a Grand Slam singles final for the first time since 2009.
"I would love to see her across the net from me on Saturday", Venus said.
But Venus ended her incredible run with a chest-thumping victory to keep the dream final between the William sisters (Venus vs Serena) alive.
Serena eased past Mirjana Lucic-Baroni 6-2, 6-1 in her semi-final on Thursday, while Venus came from behind to beat compatriot CoCo Vandeweghe 6-7 (3), 6-2, 6-3.
For the 28th time in history - ninth in a Grand Slam final - sisters Venus and Serena Williams will play each other for a title, ensuring the trophy will wind up in their Palm Beach Gardens home.
Question number one for Serena Williams, ahead of Saturday's Australian Open final against older sister Serena: where will everyone sit? I feel no matter what that we have both won after all we have been through.
The ninth seed, who made the semi-final a year ago in a breakthrough season, was able to get more of a look in during the second set but it was never going to be enough. "I'm so motivated. My physio, everybody is telling me, every physio, 'Okay, now you got to rest, fix the leg, we got to start'".
The New York Times shared that the Lucic-Baroni-Williams matchup would be both players' second time to play in a tour.
Venus hopes to win an eighth major title, and her first since Wimbledon in 2008. "It's where I want to be", she said.
"It was probably one of the best experiences of my life", she said.
"Oh my gosh, I'm so excited", Venus said in her on-court interview, her voice rising.
"Everybody has their moment in the sun; maybe mine has gone for a while".
Another year brought another Williams final at Wimbledon in 2009 - but this time it was Serena's day, as she notched up her third title at SW19. She claimed the match when Vandeweghe was once again too enthusiastic on a baseline return and the ball landed out, prompting an outpouring of emotion from the victor.
She sets up a last-four clash against fellow American Venus Williams set for Thursday.