The third-seeded Serbian overpowered the four-times champion 7-6, 7-5, 6-4 in three hours of intense, high quality tennis to reach a second Melbourne final, where he will play Briton Andy Murray or Spaniard David Ferrer.
Although Federer and Djokovic both cautioned against the pronouncement of the end of an era, Li Na marked a small shift eastwards in the balance of power in the women's game by becoming the first Chinese to reach a Grand Slam singles final.
The Chinese roared back from the brink of defeat to upset world number one Caroline Wozniacki 3-6, 7-5, 6-3 and set up a clash with Kim Clijsters who overpowered Russian Vera Zvonareva 6-3, 6-3.
Djokovic aggressively took the game to Federer from the outset, moving the second seed around the court and looking to finish him off with his powerful forehand. It worked a treat in a tight first set, which the Serbian secured 7-3 in the tiebreak, but Federer mixed up his game to regain the initiative and take a 5-2 lead in the second.
Federer then reverted to his earlier tactics and it backfired badly as Djokovic, upping the aggression even further and darting athletically along the baseline, stormed back to win five straight games.
Djokovic, roared on by a noisy contingent of fellow Serbs, he held off a Federer fight back with a thumping ace to save a break point before winning the contest with another big serve which the Swiss could only hit into the net.
“It was a great performance... one of the best definitely,” said Djokovic, who won his only major title at Melbourne Park in 2008. “I want to win it again. I believe I can. Hopefully I can pull up the best tennis.”
After world number one Rafael Nadal's injury-hampered exit on Wednesday, Federer's departure meant a first grand slam final without the dominant duo since Djokovic beat Jo-Wilfried Tsonga in Melbourne three years ago.
Federer, who along with Nadal has claimed 21 of the last 23 Grand Slam titles, said it would be wholly premature to view the 23-year-old Djokovic's victory as a passing of the torch.
“They say that very quickly, let's talk in six months again,” said the 29-year-old, who was last without a Grand Slam title before he won the first of his 16 at Wimbledon in 2003.
“I'm playing well. I just ran into a player who was a bit better than me tonight.”
Li sprayed errors around the court for most of first two sets against Wozniacki and the top seed grabbed a match point at 5-4 in the second.
That brought the 28-year-old Chinese to life and she saved it before breaking back and, finding her range with her low, hard groundstrokes, evened up the contest on a Wozniacki double fault.
“After I saved the match point, I was thinking like, ‘Okay now a chance’,” said Li, who later blamed her sluggish start on her husband's snoring.
The third set was a baseline battle punctuated with long rallies but the tide had now swung in Li's favour and she sealed victory when Wozniacki misdirected a forehand after two-and-a-half hours.
“Many players, they play a long time, but they never get to the final of a Grand Slam,” Li said. “Today I got there...”
The 20-year-old Wozniacki, under pressure to justify her top ranking with a Grand Slam triumph, rued her missed match point.
“One ball could make a big difference,” she said. “I could have been sitting here as the winner. But could have, would have, if I would have done something different.”
Belgian Clijsters thrashed Zvonareva 6-2, 6-1 in last year's US Open final and made a mockery of the second seed's hopes of a first grand slam title with a 73-minute reprise.
Clijsters brought her 'A game' to court and it was simply too much for Zvonareva.
“I was able to just stay very aggressive throughout it all... and put a lot of pressure on her,” said Clijsters. “I'm very happy with the way I ended this today... It's a nice feeling knowing there's only one more match to play.”
