The two-time Australian Open champion, now ranked 24th in the world, rolled back the years to beat Pegula, one of the most consistent players on the women's tour over the past couple of seasons and remaining favorite, 6-4 6-1 in just one hour and 37 minutes.
It marks Azarenka's best performance in Melbourne since she won the second of her two Australian Open crowns in 2013, as she advances to a second grand slam semifinal since 2020.
"It hurts to beat her because I always want her to do well," Azarenka said in her post-match interview. "But I know I need to play my best tennis because she's been so consistent. We had so many rallies ... I just had to stay there and take opportunities.
"I'm very proud that I executed my gameplan really well and it's so amazing to be in the semifinal of another grand slam.
"Last year, my tennis wasn't bad, but I wasn't there mentally. I played with a lot of fear and anxiety -- it's hard to make the right decision when you feel anxious and hesitant, so I tried to push myself in the offseason.
"When you achieve great success sometimes, you become conservative to try new things, so this season I was like, 'I'll try new things, put my head down and work hard.'"
For Pegula, who is still waiting to reach her first grand slam semifinal, there will be a lot to mull over in the aftermath of her defeat, in particular given the way her standards dropped so dramatically in the second set.
"She got off to a really slow start," Barbara Schett, a former professional and current tennis expert for Eurosport, told CNN.
"At the beginning of the match it was Azarenka that was dominating so Pegula was the one reacting more, but that's not her game style.
"She likes to be the one in control of the point and today that wasn't the case at all. I thought it was a good comeback in the first set, when she got to 5-4 she was back on serve, but then once again she was panicking, she didn't like the conditions, she kept telling her coach: 'I don't know what to do.
"'The balls are so slow, I feel like I can't hit with a lot of pace.' So she was more focused on herself and in the second set as well you could see it in her body language that she wasn't feeling great and I was thinking, last year she was playing against Ash Barty at the quarterfinals and she only won two games.
"Maybe that was in the back of her head as well, that she wanted to do really, really well this year and she just got overwhelmed or the pressure actually started to kick in."
Azarenka, of course, knows what it takes to win a grand slam, having won twice before in Melbourne in 2012 and 2013. Pegula, conversely, has never previously reached the semifinals of a slam and appeared nervous and overawed by the occasion.
Many expected Pegula, the world No. 3, to dominate with her powerful hitting, but she was barely able to get a foothold in the match early on as Azarenka raced into a 3-0 lead in the first set thanks to some booming, accurate groundstrokes.
Pegula did eventually get on the scoreboard with a gritty, hard-fought hold of serve, saving five break points in a game that lasted more than 10 minutes.
However, she soon began to cut a frustrated figure on the court, seemingly trying to play within herself in an attempt to just keep her shots inside the court. At one point, she looked towards her box and muttered under her breath, shrugging with confusion as she tried to find an answer to Azarenka's early brilliance.
With Azarenka serving at 4-2 up, Pegula had a brilliant opportunity to break back, but the Belarusian held firm to stave off two break points with a couple of unerring shots to maintain her narrow first set lead.
However, with Azarenka serving for the first set at 5-3, a combination of nerves and much-improved hitting from Pegula finally broke the 33-year-old for the first time in the match to keep the opening set alive.
But any hopes that Pegula had of turning the set around were quickly banished by Azarenka, who broke back immediately to take the first set.
Aside from the small serving blip, it was a sublime opening set of tennis from Azarenka and reminiscent of the form that helped her win her first grand slam Down Under more than a decade ago.
Things went from bad to worse for Pergula in the second set as Azarenka held and then broke serve to open up a 2-0 lead.
Pegula look perplexed after yet another groundstroke went long and this time began mouthing and gesticulating towards her box with increased frustration, hitting a ball into the court in anger.
Perhaps the outburst was the stress relief that Pegula needed as she quickly began hitting her shots with more power and accuracy, breaking Azarenka back at the first time of asking.
However, in a game that continued to ebb and flow, Azarenka again broke back straight away and then held serve to open up a commanding 4-1 lead and place one foot in the semifinals.
Azarenka has made a name as one of the better returners in the women's game and was so far nullifying Pegula's serve, a weapon which has given the American so much joy in recent seasons.
Pegula now looked beaten as Azarenka began to wear her down from the baseline; if Pegula had hoped her opponent's level would drop at some point, she perhaps realized at this moment that it wasn't going to happen.
She tried a couple of desperate shots in an attempt to mix things up, but one especially poor drop shot was bounced upon and dispatched with aplomb by Azarenka.
Azarenka then broke Pegula for the fourth consecutive game and with it the last bit of her resolve to take a 5-1 lead and then promptly served out the match.
'Vika' joked in her post-match interview that she was eager to get back home to her son -- who Azarenka admitted is more into soccer than tennis -- and her new dog.
If Azarenka continues to play as she did on Tuesday, then they will likely have to wait until next week for mom to get home.
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