The top seed, who is bidding to become the first man in the Open Era to win three consecutive titles in Melbourne, will now face the winner of Friday's second semi-final between US Open winner Andy Murray and Roger Federer.
Djokovic needed only an hour and 29 minutes to inflict a chastening defeat on Ferrer who has now lost all five of his grand slam semi-final appearances.
Indeed, in total Djokovic surrendered just seven points on serve as he produced a virtually flawless display that he would later describe as one of the best of his career.
Having won the toss and opted to serve Ferrer made a solid enough start as the first three games went with service, but Djokovic then began to open his shoulders and, having broken for the first time to move 3-2 ahead, proved simply too strong.
With the Spaniard throwing in more and more unforced errors as his opponent turned the screw, Djokovic reeled off four games on the trot with ease to clinch the first set in under half an hour.