"This is the best I've felt in the entire tournament," said Djokovic, who hit 30 winners and 17 aces. "I could swing through the ball. No pain. The best match so far."
He added: "Couldn't be better timing for me to play my best tennis."
Djokovic, 33, who has never lost an Australian Open final, is one win away from his 18th Grand Slam trophy, snapping at the heels of Roger Federer and Rafael Nadal, who are on 20.
In his way will be fourth seed Daniil Medvedev or Nadal's conqueror Stefanos Tsitsipas, the fifth seed, who play their semi-final on Friday.
"I'm going to take the popcorn and enjoy it," he said. "I absolutely have zero preference."
"I'm ready for the toughest match of the tournament... both of these guys are in great form," he added.
"Medvedev is playing extremely high quality. He is the player to beat.
"Tsitsipas produced some phenomenal tennis against Rafa.
"He's definitely going in the right direction. He has no holes in his game."
Djokovic remained cagey over his injury, which he first suspected being a torn muscle, saying he would only reveal its extent after the final.
But he said he planned to resume training on Saturday, after being unable to practise between matches because of the injury.
"I am surprised the way I felt tonight. I think it surpassed my greatest wishes," he said.
"I just have... this pretty good ability to recover fast."
Moving sharper than he has since he was injured while playing Taylor Fritz, Djokovic lifted his intensity in his best performance of the tournament.
Karatsev, however, wasn't disgraced after becoming the first man in the Open era to reach a semi-final on his Grand Slam debut, and just the second qualifier to do so at the Australian Open after Bob Giltinan in 1977.
His magical run included wins over eighth seed Diego Schwartzmann, 20th seed Felix Auger-Aliassime and 18th seed Grigor Dimitrov, but came up short against the ultimate test.
A wary Djokovic had predicted Karatsev would come out aggressively and he proved right with the underdog undaunted in a free-wheeling approach.
Aside from being briefly menaced by a butterfly as he prepared to serve, Djokovic wasn't rattled and his defensive mastery suffocated Karatsev in the eighth game.
He subsequently clinched the first set with an ace and then put the foot down to break to love.
Karatsev wouldn't go away, almost wiping away Djokovic's advantage before the eight-time champion held serve in a see-sawing 10th game and celebrated with gusto.
Despite some service struggles, Djokovic was not to be denied to record his first straight-sets victory since an opening-round romp against Jeremy Chardy.
Journeyman Karatsev, who spent a chunk of his youth in Israel, Germany and Spain, and had failed on nine previous occasions to qualify for a Grand Slam tournament, is set to rocket to 42 on the ATP rankings.