Serena Williams has set up a dream Australian Open final against her sister Venus following a commanding win over Croatia’s Mirjana Lucic-Baroni.

Serena Williams eased past the Croatian fairytale story of the tournament with a 6-2 6-1 semi-final win.

It sets up the women’s decider everyone was hoping for after a resurgent Venus Williams defeated Coco Vandeweghe in three sets.

The all-conquering sisters last squared off for a grand slam crown at Wimbledon in 2009, when Serena prevailed 7-6 (7/3), 6-2.

At 35, Serena leads 36-year-old Venus 6-2 in matches played on tennis’s four grandest stages and another victory at Melbourne Park — in a repeat of their 2003 final — would give her an unprecedented seventh Australian Open singles title.

“For us to both be in the final is the biggest dream come true for us,” Serena said.

“I was really proud of Venus. She’s another total inspiration, my big sister.

“She’s basically my world and my life. She means everything to me and I was so happy for her obviously.”

Serena also shares the open-era record of 22 majors with Steffi Graf but can surpass the great German on Saturday and draw to within one of Margaret Court’s all-time benchmark of 24 grand slam singles titles.

Serena can also regain her world number one ranking — which she has held for a total of 309 weeks — if she dethrones defending champion Angelique Kerber, who crashed out in the fourth round.

But the second seed is taking nothing for granted ahead of what will be her 29th grand slam final.

“She’s my toughest opponent. No one’s ever beaten me as much as Venus has,” Serena said.

“I just feel like no matter what happens, we’ve won.

“She’s been through a lot. I’ve been through a lot. To see her do so well is great so I look forward to it.”

Venus back in business

Venus Williams reached her first Australian Open final since 2003 in a come-from-behind win over compatriot Vandeweghe.

Williams went down to a tie-break in the first set but fought back with a vengeance to take out the match 6-7 (7-3) 6-2 6-3.

It keeps the possibility of a dream final in the women’s draw alive, with sister Serena Williams taking on Mirjana Lucic-Baroni in the second semi-final.

“Oh my gosh, it means so much, mostly because she played so well,” Williams said on court.

“She played so unbelievable. [It felt like] I had to play defence the whole time.

“There was never a moment of relaxation ever, so to be able to get to the final through a match like this … I’m excited about American tennis as well.”

CoCo Vandeweghe lost her composure in the second set. Photo: AAP.

Vandeweghe had taken out titleholder and world number one Angelique Kerber, French Open champion Garbine Muguruza, former Wimbledon finalist Eugenie Bouchard and 2015 US Open runner-up Roberta Vinci during her march to the semi-finals.

The big-hitting world number 35 made another lightning start on Thursday, breaking Williams in the opening game of the match.

But contesting her 21st grand slam semi-final compared to Vandeweghe’s first, Williams struck straight back as her less-experienced foe double-faulted on break point.

Games then went with serve until the tiebreaker, which Vandeweghe claimed to take a one-set lead.

It was the first set Williams had dropped all tournament – and she was quick to hit back.

Serena Williams prepares to serve to Mirjana Lucic-Baroni during their semi-final. Photo: AP

Vandeweghe bounced her racquet into the court after dropping serve to love in the third game of the second set and was fortunate to escape a warning for belting a ball angrily into the crowd after being broken again to fall behind 4-1.

The big lead was enough as Williams wrapped up the second set with her eighth and ninth aces of the match.

Williams rode the momentum to another break in the opening game of the deciding set and there was no way back for Vandeweghe as the former world number one clinched victory on her fourth match point.

At 36 years and 226 days, she becomes the oldest woman in the 49-year open era to reach the final.