The Chinese sixth seed produced a masterful display to record her ninth win in 13 matches against the world number two and reach her second final in Melbourne.
"I think she played a really great match," said Sharapova. "She was certainly much more aggressive than I was, dictating the play.
"I was always on the defence. When I had my opportunities and breakpoints in games that went to deuce, I don't think any of them really went my way today.
"She's playing really confident tennis. I thought she played really well, probably the best she's played against me. There's no reason why she can't win."