The seven-time champion, in her 20th Australian Open and 77th Grand Slam, raised her intensity and accuracy to beat the Romanian second seed 6-3, 6-3 on Rod Laver Arena.
“Definitely think this is the best match I have played this tournament, for sure,” said 10th seed Williams, who is another step closer to a record-equalling 24th Grand Slam title.
“Obviously I had to be going up against the number two in the world, so I knew I had to do better, and that’s what I did and I’m excited.”
The 39-year-old, 23-time major winner has lost four Slam finals while chasing Margaret Court’s all-time mark since her last major victory at Melbourne Park in 2017 while pregnant.
Japan’s Osaka stands between Williams and a place in another decider after the third seed crushed Taiwanese veteran Hsieh Su-wei 6-2, 6-2.
“I feel good. I feel like, you know, I’m here and I’m happy to be here,” said the veteran, after reaching her 40th Grand Slam semi-final.