No. 2-ranked Nadal won their semifinal 6-7 (5), 6-2, 7-6 (5), 6-4 on Thursday to improve his record to 8-2 in Grand Slam head-to-heads against Federer. It was the first time the pair has met in major semifinal since the 2005 French Open.
In the final, Nadal will play the winner of Friday's semifinal between defending champion Novak Djokovic and two-time finalist Andy Murray.
The 25-year-old Spaniard won the 2009 Australian title but lost in the quarterfinals in his next two trips to Melbourne Park. Federer hasn't added to his record 16 Grand Slam titles since he won the 2010 Australian Open.