Kvitova, who enjoyed a breakthrough victory over Sharapova at Wimbledon in July, beat Italy's Sara Errani 6-4, 6-4, before Sharapova ended the fairytale run of 56th-ranked Ekaterina Makarova 6-2, 6-3 to reach the semi-finals.
Kvitova needed to call on all her resources to see off the tricky Errani, who troubled the world number two with her guile and deception.
The 21-year-old Kvitova was always favored to win against Errani, but the Italian fought all the way in the first set, using a variety of shots to disrupt the world number two.
Kvitova broke Errani three times in the first set but lost her serve twice herself as the Italian made up for a lack of power with superb court coverage and clever shot-making.
The Czech won a tight first set in 53 minutes, but allowed Errani to skip away to a 4-1 lead before recovering to win the next five games in a row.
"In the beginning I was a little nervous because I knew that everybody expected it will be an easy match," Kvitova said. "Probably I had in my head that it's a good draw, but Sara played very well.
"I played like I wanted to have many winners in a short time and I made mistakes."
Kvitova is the first Czech woman to reach the Australian Open semis since Jana Novotna in 1991, and is now in the box seat to be the next women's number one, although Sharapova can also hit the top ranking if she lifts the trophy.
And 2008 winner Sharapova was impressive in her win against Makarova, who shocked five-time champion Serena Williams in the previous round and earlier upset seventh seed Vera Zvonareva.
Sharapova easily handled her fellow Russian's left-handed serves and overpowered her in the baseline rallies in an impressive display.
It is the first time Sharapova has reached the final four in Melbourne since 2008, when she claimed the most recent of her three major trophies.
The photogenic blonde has since suffered injury problems and she said her return to contention for grand slam titles vindicated her hard work in recovery and training.
"It's been a long road back to this big stage, but after hitting the winning shot you look back and think everything was worth it, no matter how tough it was," she said.
Sharapova started brilliantly against Makarova and had her under pressure from the very beginning, holding her own serve with ease and pressuring her opponent's.
The pressure told for Makarova when she cracked in the fourth game and again in the eighth to hand Sharapova the first set in 43 minutes.
She had a glimmer of hope when she broke Sharapova early in the second set, only to give it straight back with a poor service game. Sharapova needed no second invitation and raced away to a 5-2 lead.
She had her first match point on Makarova's serve, and then two more on her own before clinching the quarter-final on her fourth opportunity when a Makarova forehand sailed long over the baseline.