The stars who met in eight Grand Slam finals were on the same side of the draw for the first time at a major since 2005.
Two weeks ago, Nadal injured his right knee and wasn't sure he'd be able to start the tournament. Now, he can barely believe he's in the final.
"If you tell me that two Sundays ago, I really cannot imagine," Nadal said. "For me, it's a dream to be back in a final of the Australian Open."
Nadal will have the opportunity Sunday night to win another championship, when the Spanish left-hander plays the winner of the semifinal Friday between defending champion Novak Djokovic andAndy Murray.
Nadal, who holds a 6-2 edge in Grand Slam finals against Federer, made the key service break in the ninth game of the fourth set, making an incredible cross-court forehand winner from well behind the baseline, then watching as Federer hit a backhand wide to give Nadal a 5-4 lead.
Serving for the match, Nadal moved two points away from the win when Federer sent a backhand long. He won on his second match point when Federer floated a forehand long.
At the end, Nadal smashed a ball up high in the stadium, almost clearing the roof. He then applauded along with the crowd when Federer walked off.
The 25-year-old Spaniard won the 2009 Australian title but lost in the quarterfinals in his next two trips to Melbourne Park. Federer hasn't added to his record 16 Grand Slam titles since he won the 2010 Australian Open
"I thought Rafa played well from start to finish," Federer said. "It was a tough match physically as well. I'm disappointed, but it's only the beginning of the season. I'm feeling all right, so it's OK."
When the often enthralling play was suspended for 10 minutes late in the second set for an Australian Day fireworks display, Federer seemed to be affected most. Nadal led 5-2 at the time, and Federer lost his serve in the next game to give the Spaniard the set. In all, the Swiss dropped 11 points in a row.
"It's tough, it's not helpful, that's for sure," Federer said of the break for the fireworks. "They told us before, so it was no surprise. But I knew it was a lot of points in a row that I lost."
The capacity, 15,000-strong crowd was evenly split in its support. Each time somebody called out for Nadal, it was met by a response for Roger. The cheers were just as loud for Nadal's scrambling, sometimes astonishing, passing shots as for Federer's deft winners.
With the players on serve in the second set, Nadal went so far wide on a Federer return that he was near the side wall of the arena. Somehow, he stretched wide and returned the ball cross-court for a winner. That set up three break points and Nadal clinched the game to take a 4-2 lead in the second set.
Federer saved a set point in the 11th game of the third set that eventually forced a tiebreaker. But Federer made three unforced errors in the tiebreaker to give Nadal a 6-1 lead, and the Spaniard clinched the set on his last opportunity of five set points.
"Please win the point, that's all," Nadal recalled when asked what he was telling himself at 6-5 in the tiebreaker. "I was very, very nervous at that moment. Losing four set points in a row is tough, especially when you play the toughest in history."
The Associated Press