Federer was outplayed for large parts of the match but lifted when it mattered to beat the eighth seeded Chardy in three sets 6-3, 6-7 (3/7), 6-3.
The one hour, 55 minute win puts Federer into Sunday's final against local hero Lleyton Hewitt, who took 35 minutes longer to beat Japan's second seeded Kei Nishikori 5-7, 6-4, 6-3.
Federer, who at 32 is the same age as Hewitt, admitted he found it difficult to like the Australian at the start of their careers but said they had both mellowed as they grew older and became fathers, and now they sometimes practised together.
"It's amazing we have a chance to play in Australia, our first time in a final here I think.
"I struggled a lot against him in the early stages of my career."
Federer looked as though he was headed for a straightforward win against Chardy when he broke the Frenchman's opening service game to jump out to a 2-0 lead.
But Chardy recovered from that setback to work his way into the match and he began to look increasingly comfortable against the 17-time Grand Slam winner.
Chardy raced through the tiebreak to level the match and an upset looked possible against an at-times frustrated Federer.
