The seven-time champion, 27, saw off Djokovic 6-4 3-6 6-1 6-7 (3-7) 9-7 in four hours and 37 minutes.
Nadal will play compatriot David Ferrer or France's Jo-Wilfried Tsonga in Sunday's final.
Friday's first semi-final had been the focus of attention ever since the draw paired Djokovic and Nadal in the same half, and it did not disappoint.
While not quite matching the five hours and 53 minutes of their 2012 Australian Open final, there was drama every step of the way.
Nadal failed to serve out the match in the fourth set and Djokovic let a 4-2 lead slip in the fifth, before the Spaniard proved the stronger as the decider headed past one hour and 20 minutes.