The American, 34, reached her 88th career final by beating Poland's Agnieszka Radwanska 6-4 7-6 (7-1).
It took 2012 champion Azarenka just over two hours to see off Karolina Pliskova, with the 26-year-old Belarusian winning 7-6 1-6 6-2.
"This year has been great. It feels so great to be supported," said Williams, twice a winner of the tournament.
"It's been a great comeback here in Indian Wells. I'm excited about that."
Williams won seven games in a row to take the first set and go 3-0 up in the second, before seven successive points clinched victory in the tie-break.
She has won 23 of her 24 matches at Indian Wells, taking a self-imposed 14-year exile from the event amidst allegations of racial abuse from fans after sister Venus withdrew minutes before their semi-final in 2001.
"I had a lot of support, I heard a lot of 'go Serenas' and that was kind of cool," added Williams, who won the tournament in 1999 and 2001.
World number one Serena Williams will face Victoria Azarenka in Sunday's BNP Paribas Open final at Indian Wells.