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.

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Fox initially showed neat footwork to avoid a challenge from Alfredo Morelos.
But he then delayed making the clearance, allowing the striker to steal the ball from his toes and roll it into an empty net for 2-0.
"He feels low enough about it. He's a great professional and will bounce back," McIntyre told BBC Scotland.
"He's made a glaring mistake today, he knows that and doesn't need me to tell him.
"The mistake is what it is - Scott knows he has to do better there - and the other two goals were preventable. He doesn't need to say anything.
"He's been fantastic in my time here and produced save after save that's won us points."
Morelos had already powered a header beyond Fox before the goalkeeper's error of judgement, with Rangers dominating the first half in Dingwall.
The hosts improved after the interval, with Thomas Mikkelsen reducing the deficit with a header before Eduardo Herrera made the points safe for the visitors with a late finish.
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"I don't think we were brave enough in possession of the ball," said McIntyre.
"We took too long to make our passes and we didn't get enough pressure on Rangers.
"We've had a lot of plaudits in my time here when we've come up against the big boys, but today I felt we went into our shells in that first half and that's the first time I have had to say that to the team as a group.
"The second half was a lot better and it had to be. We made the system change, but it's nothing to do with systems, it's about being brave, taking the ball in tight situations.
"I felt we fed their support the way we gave the ball away in areas of the pitch and that just gathers momentum for Rangers."
County have gone three games without a win, but McIntyre had still been pleased with aspects of their previous play.
"I described our first-half performance against Motherwell last week as one of our best in my time here, that's probably the worst," he added.
"There was a lack of belief there and, when you give the ball away as much as we did, a few players went into their shells, it's as simple as that. I can't hide from that.
"It's not good enough and I won't accept that type of first-half performance. The players are fully aware of that.
"They show a reaction by getting a goal back and being better, but it's a long way back when you concede the kind of goals we conceded."
World number one Serena Williams will face Victoria Azarenka in Sunday's BNP Paribas Open final at Indian Wells.
[NEXT_CONCEPT]
Ross County manager Jim McIntyre is backing goalkeeper Scott Fox to recover from the error that gifted Rangers a goal in Sunday's 3-1 defeat.