The 2016 winner, seeded 21, brushed aside the American 17th seed 6-1, 6-2, breaking her much-vaunted serve at will as she triumphed in 51 one-sided minutes on Rod Laver Arena.
"It's always tough to play against Madison," said Kerber, who also won the US Open in 2016.
"She is hitting the ball so hard and I was just trying from the beginning, like I played the whole week, just to play my game.
The match was billed as a classic contrast of styles, the big-serving power game of Keys versus the scurrying, chase- everything-down, all-action approach of Kerber.
For Keys so much depends on the serve, which is a formidable weapon.
When on song it sets up the American's power game as in her last-16 match when she blew away Caroline Garcia with 32 winners on the back of nine aces.
But on Wednesday Kerber negated it from the off, winning 57 percent of points on Keys' first serve.
"I was not thinking a lot about winners or errors, I was staying in the moment and tried to play every single point," Kerber said.
"I'm just happy to get through and be here in the semis."
Keys, who reached the semi-finals at Melbourne in 2015, momentarily held back the tide with a break to love to get back to 3-2.
But the German juggernaut rolled on with a break back and a dominant hold, sealed with a tremendous overhead from near the baseline, to give Kerber a 5-2 advantage.
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