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Both players competed in a similar epic battle this time last season, but it was the former world number one who came out on top 12-10 in the fifth set.
In Melbourne, it appeared to be business as usual in the first set when Djokovic grabbed the first break point of the match and used his trademark athleticism across the court to take control.
Wawrinka fought back in the second set to grab a vital break while staying strong on his service games.
The Serbian pro secured six winners, but he failed to push Wawrinka on his serve and relinquished the second set, leaving the match all square.
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The world number two began to crumble on the court as Wawrinka took full control by snatching two break points and scoring six winners, while Djokovic was left with 13 unforced errors and a 2-1 deficit on sets.
The fourth set was a tight affair between the competitors as games went by the way of serve, despite both players coming close to a crucial break point.
While Djokovic experienced a slump in the third, he overcame his wobble to take the break and score 16 winners, while his Swiss opponent squandered two break points to relinquish the set.
It was a tense contest in the fifth and final set as both players managed to grab a break point, which placed the games level once again.
From then on, Djokovic and Wawrinka stayed composed during their service games, and the clash was on course for another epic battle, but it was Wawrinka who grabbed a crucial break of serve to convert match point on 9-7 and reach the semi-finals.
It denies Djokovic's hopes of a fourth straight Melbourne crown.