The 35-year-old defeated Matteo Berrettini 6-3 6-2 3-6 6-3 on Rod Laver Arena to reach his sixth Melbourne final and 29th overall at a slam.
Victory on Sunday would see Nadal surpass his great rivals Roger Federer and Novak Djokovic and become the first man to win 21 grand slam titles.
Yet for much of the last six months he was unsure whether he would even be able to play competitively again as a long-standing foot problem worsened dramatically and did not improve.
“I went through a lot of challenging moments, a lot of days of hard work without seeing a light there,” said Nadal, who also contracted coronavirus last month.
“A lot of conversations with the team, with the family, about what can happen or what’s going to happen if the things continue like this, thinking that maybe it’s a chance to say goodbye.
“That was not a lot of months ago. To be able to be where I am today, I really can’t explain in words how important it is for me in terms of energy, in terms of personal satisfaction, in terms of being very thankful for all the support that I received from the fans and especially from the people really close to me.
“It’s much more important to have the chance to play tennis than win the 21.”
Playing at an exhibition event in Abu Dhabi last month persuaded Nadal and his team that making it to the Australian Open might be possible.
The sixth seed’s coach Carlos Moya told AS: “The issue with this injury is that there is no definitive treatment. If you could operate, spend six months out and look good, but it’s not like that.
“We had several conversations during the pre-season, because we saw that it was not progressing. Then he told me: ‘Let’s go ahead and, if I break, I break’.”
It is clear how much Nadal has exceeded his own expectations so far and, after scraping through a five-set contest with Denis Shapovalov in the quarter-finals, he produced a fine display to see off seventh seed Berrettini.
Playing under the roof on Rod Laver Arena while thunder rolled around Melbourne, the Spaniard was in complete control for two sets and showed all his experience and competitive nous in recovering from losing the third to clinch it in four.
Nadal will now try to match Djokovic by becoming the second man in the Open era to win each slam title at least twice having claimed his only title in Melbourne back in 2009.
“For me it’s all about the Australian Open more than anything else,” said Nadal. “It’s an amazing event. I’ve been unlucky with a few injuries. I was close a couple of times. I feel very lucky that I won it once in my career in 2009 but I never thought about another chance in 2022.”
Berrettini found his weaker backhand ruthlessly targeted by Nadal early on and last year’s Wimbledon finalist did not manage to get a foothold in the match until the third set.
He finally began to do some damage with his big forehand and broke the Nadal serve for the first time in two matches in the eighth game of the third set but that proved the high point.
The Italian was disappointed by his start, saying: “The first two sets weren’t what I expected, what I wanted from myself. I was, I wouldn’t say flat, but I wasn’t in the right mood, in the right mental mindset.
“It was good that I had a really big and good reaction. This is the thing that I’m most proud and happy about. But you cannot be in the court I think like this for the first two sets against a player like Rafa.”
Berrettini, who is yet to beat a top-10 opponent at a slam, has reached at least the quarter-finals at the last four tournaments, losing three times to Djokovic and now once to Nadal.
“Makes me feel that maybe it’s time to beat them,” said the 25-year-old.