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A repeat performance was not meant to be, as Clijsters was wide on match point to end any chance at becoming the eighth woman to repeat as Aussie champion.
Azarenka is 3-3 in her career against Sharapova, with two of those wins coming in finals.
After that battle, Sharapova downed second-seeded Petra Kvitova 6-2, 3-6, 6-4 to avenge her loss to the Czech in last year's Wimbledon finale.
Kvitova beat Sharapova in straight sets to win her first Grand Slam last July, but trailed early against the three-time major titlist on Thursday at Melbourne Park.
"In the third set, I felt she always had the advantage because I was always down on my serve," said Sharapova, who piled up five double faults in the third set and 10 in the match. "I just told myself "You just gotta go for it, don't let her finish off the points like she likes to."'
The 22-year-old Azarenka, meanwhile, became the first Belarusian woman to reach a Grand Slam final since Natasha Zvereva was the runner-up at Roland Garros in 1988 when she was representing the Soviet Union.
If this was, in fact, the Belgian's final visit to the season's first major, she went down fighting. Azarenka broke Clijsters' second service game of the match, then fought off four break chances in the proceeding game.
Azarenka held serve with relative ease the rest of the opening set to stay in the driver's seat, but Clijsters began her comeback by breaking at love on Azarenka's first service game in the second.
But Azarenka, riding a 10-match winning streak after winning in Sydney earlier this month, earned her fourth break of the match to serve for a spot in the final.
In the quarterfinals, Clijsters fought off four match points against last year's Aussie runner-up to her, Li Na.
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