Azarenka had no trouble in a 6-1, 6-0 win over Kazakh qualifier Ksenia Pervak on Thursday before Williams beat Stephens 6-4, 6-3.
Williams converted both of her break points and fended off one break chance in each set to hold off her 19-year-old Fed Cup teammate, later saying Stephens had the potential to be "the best in the world one day."
Williams has an 11-1 record against Azarenka and was 5-0 against the 23-year-old Belarussian in 2012, including the U.S. Open final.
Stephens was hitting the ball hard and cleanly, and got the better of some powerful rallies with her childhood hero but lacked the experience at the two key moments of the match
-- giving up a set point after having game point in the first and again in the eighth game of the second set.
Azarenka started the year on a hot run, winning the Sydney International and the Australian Open
-- her first major -- and gaining the No. 1 ranking during a 26-match winning streak.
But after Azarenka's first-round exit in the French Open, Williams finished 2012 as the most dominant woman on tour with a 31-1 record in the latter half of the season and titles at Wimbledon, the London Olympics, the U.S. Open and the WTA Championships.
With the Australian Open starting on Jan. 14, and neither Azarenka nor Williams playing another tournament before then, Friday's semifinal shapes up as an early season showdown.
"I'm going up against the world's greatest tomorrow. She had a fabulous (last) year," Williams said of Azarenka. "I feel like I have nothing to lose. She's playing so well, she won I think in 20 minutes today. I have a lot of work to do tomorrow."
Azarenka took only 68 minutes to win her quarterfinal match, breaking Pervak's serve seven times.
Pervak had opened the tournament with an upset win over former No. 1 Caroline Wozniacki, but didn't have anything left to trouble Azarenka after coming off back-to-back matches decided in third-set tiebreakers.
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Azarenka was looking forward to a chance to play Williams, a 15-time major winner, before the first Grand Slam event of 2013.
"Well, it's a tough match, there is no question about it," Azarenka said. "I'm looking forward to it. It's going to be a great test for the Australian Open."
Azarenka and Williams are the only two seeded players still in contention in Brisbane after No. 36-ranked Anastasia Pavlyuchenkova of Russia beat No. 4 Angelique Kerber of Germany 7-6 (3), 7-6 (3), her second win over a top-10 player this week after eliminating 2011 Wimbledon champion Petra Kvitova in the first round.
Pavlyuchenkova, a semifinalist in Brisbane in 2011, will next play Lesia Tsurenko of Ukraine, the lucky loser from qualifying who got into the main draw when No. 2-ranked Maria Sharapova withdrew due to a sore right collarbone.
Tsurenko had a 6-3, 6-4 win over Daniela Hantuchova of Slovakia.
"I'm the first time in my life lucky loser, and it's really surprising for me to take the spot of Maria Sharapova," Tsurenko said. "I'm just enjoying now. That's my chance. I'm just taking it."
In the men's second round, Grigor Dimitrov of Bulgaria upset No. 2-seeded Milos Raonic of Canada 6-3, 6-4 and Denis Istomin of Uzbekistan had a 7-5, 7-5 win over former No. 1 Lleyton Hewitt.
Defending champion Andy Murray, the Olympic and U.S. Open champion, was playing Australian qualifier John Millman in a late match.
Press; By JOHN PYE]
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