The 19-year-old Keys overcame a left thigh injury to beat No. 18-ranked Venus 6-3, 4-6, 6-4 and advance to the last four against top-ranked and 18-time major winner Serena, who had little trouble beating last year's finalist, Dominika Cibulkova, 6-2, 6-2.
In men's play, top-seeded Novak Djokovic didn't face a break point against hard-serving Milos Raonic in beating the Canadian 7-6 (5), 6-4, 6-2 in exactly two hours to advance to his 25th Grand Slam semifinal. Djokovic has only dropped his serve once this tournament.
He broke Raonic early in each of the second and third sets and will play defending champion Stan Wawrinka, who earlier beat Kei Nishikori 6-3, 6-4, 7-6 (6). Wawrinka let slip a 6-1 lead in the third-set tiebreaker and eventually needed six match points to close the victory on Rod Laver Arena.
Serena Williams made her win look easy despite suffering from a bad cold.
"I've been sick the past few days, and it's just getting worse and worse, but hopefully it will get better," Williams said. "I heard there's a virus going around with a lot of the players, and I think I caught it."
There had been some hope that the semis might feature an all-Williams matchup at a major for the first time in more than five years. The Williams sisters last met in a Grand Slam match at Wimbledon in 2009, when Serena won the final.
The semifinalists from the other half of the women's draw have already been determined — No. 2 Maria Sharapova will play No. 10-seeded Ekaterina Makarova, also on Thursday.
Serena's win doesn't bode well for the other three women left — all five past times Williams has advanced to the semifinals at Melbourne Park, she's won the tournament.
Venus Williams' loss ended an encouraging 10 days at Melbourne Park for the 34-year-old, seven-time Grand Slam singles champion. She hadn't advanced to the quarterfinals of a Grand Slam since the U.S. Open in 2010 and had struggled to recapture her earlier form after being diagnosed in 2011 with Sjogren's syndrome, an auto-immune disease that causes fatigue and joint pain.
"It already feels like a long season already, so many matches in a row," she said. "Hopefully I'll be able to keep this up."
Regardless of the quality of the match, in which the two players combined for 83 unforced errors, Keys was pleased to be through to the semis.
"It's amazing, you just have to embrace the moment," said Keys, who is now coached by three-time major winner Lindsay Davenport. "And I get to enjoy another moment next round."
She later identified her injury as a left adductor, and was optimistic it wouldn't affect her in her match against Serena. The same injury forced her to retire from her third-round match at Wimbledon last year.
Djokovic looked impressive as he proceeds towards a fifth Australian Open title, adding to the ones he captured in 2008 (his first major), and three years in a row from 2011.
With Roger Federer and Rafael Nadal gone from the other side of the draw, Andy Murray, if he beats Tomas Berdych in the other semifinal on Thursday, could be his major opposition for another trophy.
Djokovic said he was impressed with how well he played.
"Great, great performance," Djokovic said about himself. "Definitely no complaints. I returned very well, tried to get as many of the balls back in play."
Wawrinka looked to be cruising in his tiebreaker with Nishikori, but the Japanese player saved match point after match point with a combination of great shots and errors by Wawrinka.
Nishikori made the biggest error at the wrong time, however, attempting a drop shot from the back of the court that bundled into the net. That set up another match point for Wawrinka, which he converted with an ace, his 20th of the match.
"Phew, I'm still nervous," Wawrinka said in his post-match interview on court. "It's never easy with his returning. You have to go for it."
Nishikori said he had a difficult day.
"I was struggling with my serve ... I couldn't get good rhythm in the first and second set," Nishikori said. "He played really aggressive, great tennis. Mentally I was fine, I was ready to go. But he was a little bit better today."