Before the tournament Nadal was going for his fourth straight Grand Slam win and Federer was aiming for his fifth Australian title.[break]
Instead, Nadal was eliminated by fellow Spaniard David Ferrer and Federer is heading home. Djokovic will face Andy Murray or Ferrer in the final.
It will be the first time since 2003 that Federer will not hold any of the four major titles.
The finals scenario could open the door for Murray to become the first British Grand Slam singles champion since Fred Perry in 1936 when the final is played Sunday night at Rod Laver Arena.
"It´s really one of the best matches I´ve played in a while," Djokovic said.
It is the second straight Grand Slam in which Djokovic has knocked Federer out in the semis. At last year´s U.S. Open, the Serbian player saved match points before beating Federer in five sets to advance to the final against Nadal.
The last time Federer was beaten in straight sets in a Grand Slam tournament was here in 2008 — against Djokovic.
Federer won 11 of 14 points to come back from a service break down to take the lead in the second set after the two traded tit-for-tat booming forehands and chip backhands during the opening set. But Djokovic broke back later in the second set and took his power strokes into the third set to win in an even three hours.
It was the 20th meeting of the pair. Federer still holds a 13-7 edge.
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