A two-time runner-up at Melbourne Park, Li was in fine form as she claimed a 6-2 6-4 win over Bouchard, the Canadian 30th seed, in their semi-final.
China's Li, the fourth seed, deservedly moved into favouritism for the title after the exits of Serena Williams, Victoria Azarenka and Maria Sharapova.
And she showed why.
The 2011 French Open champion was in scintillating form early and although she was unable to maintain her incredible level, she finished with 35 winners and 23 unforced errors.
Bouchard's breakout tournament came to an end, but she was far from embarrassed against a red-hot Li.
Li sent a message in the opening game, crunching three winners to break as Bouchard failed to put in a first serve.
When Li broke to love soon after, it was 3-0 after eight minutes on the back of six winners and forcing Bouchard into five errors.
Bouchard's run of service games without a winning point continued as Li's aggression left her scrambling without success.
Li led 5-0 inside 15 minutes, silencing the Genie Army who had only been given three points to cheer about.
But Bouchard got on the board – Li's two double faults did her plenty of favours – to settle the nerves she had been largely unaffected by throughout her Australian Open main-draw debut.
The 19-year-old looked to have finally settled but it was too late as Li claimed the first set inside half an hour with a swinging forehand volley winner.
Bouchard held to start the second after a tough 14-point game as the incredibly high level Li was playing at dropped.
Li dropped serve then broke back, but just how even the contest had become was illustrated in the first three games taking just five minutes fewer than the first set.
The 2011 and 2013 runner-up broke to go 3-2 up thanks to three winners – two off the backhand side and another off the forehand.
The service breaks continued as the fourth one of the set saw Bouchard level at 3-3 as fantastic depth pushed Li back before the 31-year-old hit back again.
Bouchard forced Li to serve it out and she did just that, completing the win with a backhand crosscourt winner after an entertaining final point.