She will play two-time Wimbledon champion Petra Kvitova, who beat Serbian qualifier Aliaksandra Sasnovich 6-1, 6-2.
Despite the disappointing end to the second set, Barty swiftly regrouped, using deep service returns to break for a 2-0 lead in the decider, and blasting an ace to claim a tough service hold for 3-0. Kvitova, the 2015 champion, surrendered her serve in the opening game and struggled to recover from her poor start, with the Czech's usually lethal backhand disintegrating amid a flurry of unforced errors in the first set.
Ashleigh Barty in action.
Nevertheless it was a brilliant week for Barty heading into the Australian Open.
Kvitova's experience finally paid off as she powered home in the tiebreaker to claim her 26th WTA tour victory.
Barty was the first to strike there, winning four straight points on the return in game two to open up the lead before Petra pulled the break back with a backhand victor in game five, returning to the positive side of the scoreboard.
In turn, it also handed Barty her second straight runner-up finish in Sydney, after losing to Angelique Kerber in last year's final.
"Not to win at home, I'm sorry", Kvitova said.
Incredibly, the momentum shifted once more, with Barty breaking the Czech to love to keep her hopes of a first Sydney title alive, but the Australian's composure deserted her as she lost the next game on serve to give Kvitova another chance.
"It's unbelievable - it truly has been a phenomenal week of tennis", Barty said.
"You know, one day you're going to make it for sure".