The seventh-seeded Kerber, who had never gone beyond the fourth round at Melbourne Park before, blasted past the dangerous Azarenka 6-3, 7-5 in her first win against the Belarusian.
It was a huge upset for the German, whose six defeats against the 14th seed included this month's Brisbane International final and an epic three-hour marathon at last year's US Open.
Her reward is a clash with Konta, whose fairytale main-draw debut tournament continued when she outclassed giant-killing Chinese qualifier Zhang Shuai 6-4, 6-1.
"I will just be trying to focus on doing the same stuff I'm doing before every match, focusing on my game," Kerber said, looking ahead to the semi-final tomorrow.
"I'll be going out there to win the match, to be aggressive, take my first chances I can get."
The 28-year-old is a renowned fighter and the quality shone through as she battled back from 2-5 down in the second set against Azarenka, a player who has been in ominous form this season.
World number one Williams plays fourth seed Agnieszka Radwanska in the other semi-final.
"I can't describe it. I was 0-6 (in their head to head) before I came on court. I said 'Just go for it and beat her'. I'm so happy to beat her for the first time," Kerber said.
"It's amazing to be in the semi-final"
Kerber, who had a stellar 2015, winning four tournaments, second only to Williams' five, is the first German into the last four here since Anke Huber in 1998.
"I think I was a little bit too flat today," said the dejected Belarusian, who won the tournament in 2012 and 2013 before injuries and personal issues derailed her career.
"For me personally, it was a little bit 10 percent not enough of everything."
The Australian-born Konta, 24, has blossomed in the last year.
She had never been beyond the fourth round at a Slam before with her exploits Wednesday matching fellow Brits Virginia Wade (who won the title in 1972) and Sue Barker (1975 and 1977) in making the Melbourne semis.
"She didn't make it easy," an ecstatic Konta said of Zhang, who had lost all 14 of her previous Grand Slam matches before she shocked world number two Simona Halep in the first round.
"I'm happy. I was able to fight every single point. I really enjoyed it. I really enjoyed playing in front of the big crowd.
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