The 31-year-old, who has reached two of the last three finals at Melbourne Park, blasted the 28th-seeded Italian off the court in 66 minutes with a strong first serve and barrage of powerful ground strokes. (Agencies)
The fourth seed has raced through the last two rounds at the season-opening grand slam after almost being knocked out by Lucie Safarova in the third round when she had to fight off a match point.
She felt that victory had given her confidence she could win her first title at Melbourne Park.
"I have a lot of confidence because I was a match point down and I came back to win the match," Li said.
"I have a lot of confidence, or belief in myself to do well. I wish I could do one more step this year," she said.
Li, who has become a favourite of the Melbourne Park crowd in recent years, revealed why she does not vent her frustration by smashing racquets during matches.
"I feel the racquet is my friend," she said in a courtside interview on Rod Laver Arena, "... she is with me on the court all the time so I have to be friends with her and she can be nice to me."
Pennetta tried to stem Li's momentum by changing her racquet late in the second set but it was to no avail.
The damage had been done earlier in the match with her service game falling apart. She won just 25 of 54 points on her own serve in the entire match.
Her lack of accuracy, with less than 40 percent of her first serves going in, allowed Li to jump out to a 5-0 lead in the first set and 4-0 in the second.
Li clinched victory with a forehand winner to set up a semi-final against either 14th seed Ana Ivanovic or Canadian Eugenie Bouchard, seeded 30th.
The 31-year-old, who has reached two of the last three finals at Melbourne Park, blasted the 28th-seeded Italian off the court in 66 minutes with a strong first serve and barrage of powerful ground strokes.