"When I play Victoria we always have good matches. She's a great player who lifts her game when it counts.''
Williams raced through the first set in just 29 minutes with three breaks of serve as Chinese fifth seed Li, playing in her first US Open semi-final, wilted under the American's trademark barrage.
It was Williams' fifth love-set of the tournament, having reached the semi-finals for the loss of just 13 games.
Li saved six match points in the 13-minute eighth game of the second set but was finally beaten when a service return was dumped in the net, having hit just eight winners in the 87-minute tie.
Azarenka reached her second successive US Open final with a win over Italian veteran Pennetta, the world No.83, in a match featuring 13 breaks of serve.
It was Australian Open champion Azarenka's third successive semi-final appearance in New York, but she will need to step it up in the final after committing six double faults and 25 unforced errors.
"I am so excited to be back in the final and get the chance to fight for the trophy,'' said Azarenka.
"It was a great match today. There were lots of emotions. It was tricky because I struggled to find any rhythm and Flavia is such a great fighter. I couldn't get a ball in play.''
In a tense, error-hit first set there were seven breaks of serve in 10 games with Azarenka, who had spent two hours more on court getting to the semi-finals than her opponent, struggling to impose her authority.
Azarenka eventually closed out the opener on a sixth point after a 10-minute game.
Pennetta, bidding to be the first Italian woman to make the US Open final after missing the 2012 tournament due to a wrist injury, had saved two of them with a couple of scintillating groundstrokes, one off each wing.
It wasn't pretty for Azarenka, who served up five doubles faults in the set and hit 18 unforced errors.
The second set also got off to a rocky start with three successive breaks before Azarenka managed to hold for 3-1 and break the flagging Italian again for a 4-1 advantage before surrendering just one more game to take the match.
-AAP