With Tuesday night's game at Optus Stadium delicately poised at 1-1 in the 58th minute, Kerr scored her fourth goal of the tournament to send the Matildas on their way.
The goal was set up by a desperate lunge from Kaitlyn Torpey on her 26th birthday and a sweet pass into the box from Caitlin Foord.
But Kerr still had plenty of work to do.
After running onto Foord's pass, Kerr rounded the goalkeeper but found herself confronted with the tightest of angles and knowing China's defenders were sprinting to the goal line.
Kerr held her nerve to thread the needle before China's defence could get back, with the goal sending the 35,170 crowd in her home city into raptures.
Australia will take on either Japan or South Korea in Saturday's final in Sydney, with the Matildas aiming to land their first Asian Cup crown since 2010.
'Our objective to get to the final is complete," Matildas coach Joe Montemurro said.
"But we know deep down in our hearts we need to be better.
"The patches where we did things right was good. Now it's about putting it together."
The Matildas made two changes to their starting line-up for Tuesday's match, with vice-captain Steph Catley returning from concussion and Kyra Cooney-Cross earning a promotion.
Centre back Winonah Heatley and veteran Emily van Egmond, who came on in the 93rd minute for a Matildas-record 170th cap, dropped to the bench.
Mary Fowler fired a close-range volley over the bar in the fifth minute, but the home crowd were in raptures a short time later when Foord opened the scoring.
A gut-busting run down the right broke from Ellie Carpenter left China's defence scrambling.
Carpenter delicately played the ball into space in the box for Fowler to run onto, with the star Manchester City attacker cutting it back for Foord to slam home.
It was a horror defensive mistake that led to China's goal in the 26th minute, with defender Clare Hunt accidentally heading a bouncing ball into her own penalty box.
That allowed Zhang Linyan to run onto the loose ball, and she collapsed to the turf under the lightest of touches from goalkeeper Mackenzie Arnold to earn a penalty.
Zhang put away the penalty, and China continued to assert themselves physically as the game went up a notch.
Chinese midfielder Wang Aifang was lucky to only receive a yellow card in the 35th minute for a studs-up challenge that resulted in her boot scraping down the leg of Katrina Gorry, who was left momentarily hobbled by the incident.
China only had 38 per cent possession in the first half but unleashed 10 shots to four.
Australia needed a spark in the second half, and it was Kerr who provided it when she nailed her moment of truth against the run of play.
"I thought we were brave," China's Australian coach Ante Milicic said.
"But in the end they have that individual quality, and that was probably the difference tonight."
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