The fourth-seed and defending champion Li upended Czech Petra Kvitova, the second-seed, 1-6, 7-5, 6-2 despite recording five double faults in the nearly two-hour long match at Sydney Olympic Park Tennis Centre.
Li did, however, convert on 4-of-6 break chances while saving 10-of-14 break opportunities for Kvitova, who could have overtaken Caroline Wozniacki as the top player in the world with a title here this week.
Li's opponent in the finals will be third-seeded Belarusian star Victoria Azarenka after she dispatched Poland's Agnieszka Radwanska, the seventh-seed, 1-6, 6-3, 6-2.
Radwanska cruised through the first set, breaking Azarenka's serve three times in eight opportunities, but would not do it again as Azarenka saved four chances in the second set and three in the third on the way to the three-set victory.
The 2012 Sydney champion will pocket $107,000. The draw here featured nine of the top-10 women in the world.