China's Li Na shocked Maria Sharapova Thursday to set up an Australian Open final against 2012 champion Victoria Azarenka, who beat teenager Sloane Stephens in controversial circumstances.

Li, Asia's first Grand Slam singles champion, came out firing and halted Sharapova's storming run with a blaze of aggression which stunned the four-time major champion 6-2, 6-2.

The Chinese world number six, who reaches her second Melbourne final, now has a chance to add to her historic 2011 French Open crown which brought tennis to public attention in her home country.

"After playing for 20 years, this is the first time in my life," she said, when asked if she'd played a perfect match.

"At the beginning of the match I was nervous. I was happy I was back in the semis again, but for some reason I really wanted to win this match.

"I don't know what happened today. I just came to the court, feeling like, 'OK, just do it'. Yeah."

While Li was compelling against Sharapova, drama unfolded in the second semi-final when Azarenka let slip five match points before being broken, and then took a 10-minute medical timeout off the court.

When she returned, with 19-year-old Stephens serving to stay in the match, the Belarusian world number one broke for a 6-1, 6-4 victory.

"I couldn't lose. I just couldn't. That was why I was so upset. I couldn't breathe out there," she said. "It's a tremendous achievement and I'm so happy I pulled it through."

In the earlier match, Sharapova had lost only nine games in her march to the semi-finals, a tournament record, but Li was always going to provide a far sterner test despite trailing 4-8 in their head-to-head encounters.

And the Russian started disastrously with consecutive double faults as she was broken in the opening game.

Four-time major winner Sharapova could have returned to the world number one ranking had she won her second Australian Open title, but Li's ball-striking had her on the back foot from the outset.

Benefiting from her intense off-season fitness training under new coach Carlos Rodriguez, Li was untroubled by the sweltering heat in Melbourne and broke for a second time to take a 4-1 lead.

Her serving was steady, and her groundstrokes were probing. Two close video rulings went against Li and Sharapova retrieved one of the service breaks, only to hand it straight back.

China's 2011 French Open champion closed out the opening set in 48 minutes, but she then missed a sitter of a forehand in a worrying sign at the beginning of the second set.

She resolutely held her serve, however, and Sharapova stumbled in the fifth game. The fifth of Sharapova's six double faults handed Li another chance to break and when the Russian went long with a backhand, Li led 3-2.

She led 40-15 in the next game but Sharapova unloaded some ferocious winners to reach break point. Li recovered to move within sight of the finish line, breaking again for 5-2.

Li lost her first match point by hooking a forehand wide, but she then polished off the upset victory as Sharapova finished with a ruinous 32 unforced errors.

"I think she played a really great match. She was certainly much more aggressive than I was, dictating the play," Sharapova said.

"I was always on the defence. When I had my opportunities and break points in games that went to deuce, I don't think any of them really went my way today."