Sharapova was the heavy favorite after conceding only nine games in her first five matches, a record at the Australian Open since it expanded to a 128-player draw in 1988.
But the semifinal started badly for the 25-year-old Russian, serving double-faults to lose the first two points and conceding a break in the first game.
Li had the backing of the crowd at Rod Laver Arena, where dozens of red and white Chinese flags swirled in a light breeze, and where the temperature topped 93 degree during the first of the semifinals.
Li was the first Chinese player to reach a Grand Slam final when she lost to Kim Clijsters in Melbourne in 2011. She had her breakthrough a few months later when she won the French Open, beating Sharapova in the semifinals along the way.
She will now play the winner of today’s later semifinal between top-ranked Victoria Azarenka, the defending champion, and 19-year-old American Sloane Stephens.
The 29th-seeded Stephens produced the upset of the tournament to advance to a Grand Slam semifinal for the first time, beating Serena Williams on Wednesday.
Stephens won 3-6, 7-5, 6-4, starting to swing hard when she was down a set and a break and keeping her composure when Williams, one of her childhood heroes, jarred her back and needed a medical timeout.
Stephens’ surprise win did instant wonders for her celebrity. Before the match, she said she had about 17,000 followers on Twitter. A few hours later, she had more than 40,000.
While there were surprises in the composition of the women’s last four, the makeup of the men’s semifinals was as expected. Top-ranked Novak Djokovic will continue his bid for a third consecutive Australian title when he takes on No. 4 David Ferrer today. No. 2 Roger Federer and No. 3 Andy Murray will meet on Friday.
Djokovic had to get through a five-hour five-setter against No. 15 Stanislas Wawrinka in the fourth round. Ferrer had trouble in his quarterfinal against fellow Spaniard Nicolas Almagro, who served for the match in the third and fourth sets before losing in five.
Federer, a 17-time Grand Slam champion, hadn’t dropped serve in the tournament until the first set against 2008 finalist Jo-Wilfried Tsonga on Wednesday. He ended up with a struggle on his hands before advancing to his 10th consecutive Australian Open semifinal with a 7-6 (4), 4-6, 7-6 (4), 3-6, 6-3 win in 3 hours, 34 minutes.
Murray beat Jeremy Chardy of France 6-4, 6-1, 6-2 earlier Wednesday and hasn’t dropped a set this tournament.