Current number one Williams sealed her place in the final in the Spanish capital for the second consecutive year as she overcame seventh seed Sara Errani 7-5 6-2.
Meanwhile, Sharapova will compete in her first Madrid final after beating Serbian Ana Ivanovic 6-4 6-3.
Williams was first to book her place in the final as she edged a close first set when she broke in the 12th game before comfortably taking the second to progress in just over 90 minutes.
"I feel that I played solid. In the second set more than the first I made a few less errors, which was something that I needed to do," she said after the match.
The 2012 Madrid champion insisted she believes she is the world's best player and is dead set on retaining her status as number one to prove it.
"I try not to pay too much attention. I always just try to play my game. You're playing players who you know their strengths and weaknesses.
"So I think if I just win as many tournaments as I can then I'll continue to be number one.
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