Graf lost the first two games at love but rallied to beat eighth-seeded Kohde-Kilsch, 6-2, 6-3, in 45 minutes.
Evert, playing from the baseline with pinpoint accuracy, downed Navratilova, 6-2, 7-5, to earn her first berth in a Grand Slam final since the 1986 French Open.
It will be Evert's sixth appearance in the Australian Open final. She won in 1982 and 1984.
Graf's victory put her in a Grand Slam final for the fourth time in her career. She is 4-6 against Evert but has won their last four meetings.
In her semifinal, Evert took a 3-0 lead and won the first set in 32 minutes, defusing Navratilova's serve with a succession of return winners. She also benefited from 39 unforced errors by Navratilova, who was trying to win a Grand Slam event for the third time in a row.
"I was under no pressure at all; Martina had all the pressure on her," Evert said.
"I've played pretty mediocre until the last two matches of the tournament, and then in this match, I played great.
"I'm always relaxed when I play Martina. She was No. 1 for so long. It is no crime to lose to her."
Navratilova said Evert "played a really great match and didn't let up. I played pretty well except for my volleying, which I think must have gone south."
Graf's victory extended her winning streak to 20 matches. Her last loss was to Navratilova in the U.S. Open final.
Graf extended her record against Kohde-Kilsch to 5-2.
Graf reeled off six games in a row in the first set, exploiting the lack of mobility and poor volleying of Kohde-Kilsch, who was plagued by a pulled tendon in her right foot.
"I gave the first games away to love, and it was a bad start. I just tried to concentrate on my service, but I was trying too much in the beginning," Graf said.
Graf, who has not lost a set in the tournament, went directly to the practice court after her win, saying she planned to work on her serve.
"This is the first tournament of the year for me, so it's good to be in the final," she said. "In the beginning of the first set, I lacked a bit of concentration."
In men's semifinals Friday, it will be top-seeded Ivan Lendl against Wimbledon champion Pat Cash of Australia, and Stefan Edberg against fellow Swede Mats Wilander.
Edberg, the defending champion, advanced to the semifinals Wednesday by beating Andrei Chesnokov of the Soviet Union, 4-6, 7-6, 6-4, 6-4, in just under three hours.
The turning point of Edberg's match came in the second-set tiebreaker at 5-5 when he appeared to hit a forehand out of court. The ball was ruled out by the linesman, but West German umpire Bruno Rubeuh overruled and called for the point to be replayed.
If the linesman's call had stood, Chesnokov would have had set point for a two sets-to-none lead. Instead, Edberg hit a forehand volley for 6-5 and followed with a service winner to end the tiebreaker and even the match.
Although disappointed about the incident, Chesnokov did not dispute the umpire's call.
Wilander, seeded third, downed another Swede, sixth-seeded Anders Jarryd, 7-6, 6-2, 6-3, in another quarterfinal Wednesday.
Wilander, 23, has an 8-5 edge in his matches with Edberg, seeded second.
Said Wilander: "I think the wind suits my game a bit better than a serve-and-volley game--especially with Edberg's serve."