Nadal beat Milos Raonic in straight sets in the quarter-finals to reach his first Grand Slam last four since 2014.
And with Roger Federer beating fellow Swiss Stan Wawrinka in yesterday's first semi-final, the Spaniard has the chance to renew his great rivalry with the former world No 1.
Rafael Nadal was given a warm reception at the Australian Open semi-final
The Australian Open crowd made their allegiances clear when Rafael Nadal walked out
The Australian crowd appear keen to see the pair clash in the final, judging by the reception they gave Nadal as he walked out for his semi-final.
Dimitrov was cheered onto the court first but the Melbourne fans reserved their loudest greeting for the 14-time Grand Slam champion, who appeared unfazed.
"Here in Australia I feel at home," Nadal said after beating Gael Monfils in the fourth round, further endearing him to the Australian crowd.
And the reception appeared to spur him on as he took the first set 6-3 to put himself in pole position for a final spot.
But Dimitrov hit back to take the second set 7-5 and level the match, chasing his first appearance in a major final.