It will be the first all-Williams final at any tournament since 2003, when Serena beat her older sister in the Wimbledon title match for the second year in a row.
Serena holds an 8-7 career edge over Venus, including 5-1 in Grand Slam finals. Since Venus won the U.S. Open in 2001, Serena has won five straight of their major finals.
"She's a tough opponent," Serena said. "I think she'll be the toughest person I've played. I'm excited."
Said Venus: "It's every Williams for themself."
Venus overpowered the fifth-seeded Dementieva in the first set and then prevailed in an error-filled tiebreaker to improve her record to 7-0 in semifinals at the All England Club.
"I am dying for S. Williams to get through," said the 28-year-old Venus, who hasn't dropped a set in five matches and will be going for her seventh Grand Slam title.
Venus then went back out to watch her 26-year-old sister, who sat through rain breaks in both sets before cranking up her big serve, saving a set point in the second set and finishing off the 133rd-ranked Zheng to put her one win away from a ninth Grand Slam crown.
After Zheng dumped a second serve into the net on match point, Serena looked more relieved than anything to get through the match. Venus fiddled with her fingernails as she watched alongside their father, Richard, in the players' box.
"She definitely pushed me," Serena said of Zheng, the first Chinese player to reach a Grand Slam semifinal and first wild-card entrant to get this far at Wimbledon. "Unbelievable, and not only that she played a great game. She played like she had nothing to lose and she didn't.
"I wanted to do more than maker a Wimbledon final," she added. "I'm just happy to be back in a Grand Slam final."
Richard Williams said he would fly back to the United States on Friday and doesn't plan to watch a single point of the final on television, saying he can't bear to watch his daughters playing against each other.
In men's play, 32-year-old Rainer Schuettler outlasted Arnaud Clement 6-3, 5-7, 7-6 (6), 6-7 (7), 8-6 in a match that took two days to complete. The German saved a match point at 5-4 in the fifth set before pulling out a 5-hour, 12-minute victory that sends him into the semifinals Friday against No. 2 Rafael Nadal.
The other men's semifinal has five-time champion Roger Federer facing a resurgent Marat Safin, a former No. 1 and two-time Grand Slam champion.
Like her sister, Serena Williams hasn't dropped a set so far. And, like Venus, she relied on her serve to pull her through when she needed it most.
"I didn't want to go three sets," she said. "I could have. I was ready to go three sets, but I felt like I didn't want to. I just wanted to close it. I just hit some big serves."
Serena, who strode onto the court wearing her custom-made white trench coat, was up 5-2 in the first set when play was suspended for 35 minutes. She came back out after the break and held serve at love to close out the set.
From one stretch late in the first set into the second, Zheng was unable to get the ball back into play on 11 consecutive return points as Serena came up with five aces and six service winners.
But Zheng, hitting cleanly from the baseline and winning most of the long rallies, hung in and went up a break at 4-2 in the second set. Serena broke right back and the two stayed even until play was stopped again by rain at 5-5.
After a delay of 1 hour, 20 minutes, Zheng earned a set point on Serena's serve at 6-5 but failed to convert, smacking a second-serve backhand return into the top of the net.
Serena got fired up, letting out a mighty scream — "Come on!" — and pumping her fist after an overhead smash on the next point. She then smacked back-to-back aces to set up the tiebreaker.
Serena took a 5-2 lead with the help of three more aces, but Zheng kept fighting and pulled even at 5-5. Serena hit a 123 mph service winner to set up match point, letting out another loud shout. The match ended tamely with Zheng's only double-fault.
Dementieva, playing in her first Wimbledon semifinal, looked nervous and was completely overmatched in the first set by Venus Williams' sheer power and pace, but settled down and made it competitive in the second. The Russian then faded badly in the tiebreaker and committed repeated unforced errors.
After Dementieva knocked a forehand into the net to end the 1:42 match, Venus skipped and hopped up and down with joy like a kid at a birthday party.
"I guess it started to set in a little bit about being in the final," she said. "When I'm excited I always jump. That I guess will never change. I'd like to celebrate even more if I'm good enough to take that title."
Asked about the likelihood of an all-Williams final, Dementieva said she couldn't imagine playing against a sibling, adding, "For sure it's going to be a family decision."
Venus took offense to a question about a predetermined outcome.
"I'm extremely professional in everything that I do on and off the court," Venus said. "I contribute my best in my sport and I also have a ton of respect for myself and my family. So any mention of that is extremely disrespectful for who I am, what I stand for, and my family."
Later, Dementieva issued a statement through the WTA clarifying her comments, saying English was not her first language.
"I do not think for one second that matches between Serena and Venus Williams are family decisions," she said. "What I meant was it is a unique situation for a family to be in to be playing for a Grand Slam title. I have a lot of respect for Serena and Venus."