The Chelsea striker took aim from distance in the 63rd minute to fire a strike into the top left corner beyond the outstretched arms of Mary Earps.
Australia were being outclassed by Sarina Wiegman's side at Sydney's Stadium Australia, only for Chelsea star Kerr to pull off a moment of magic.
It was Kerr's second goal against England in 2023 as she struck in the 2-0 friendly win in April to end Wiegman's 30-game unbeaten run.
She also now has ten goals against Manchester United goalkeeper Earps from her last ten games in all competitions.
The Lionesses quickly regained the lead through Lauren Hemp, before Alessia Russo made it 3-1 to set up a final clash against Spain.
READ MORE ON WOMEN'S WORLD CUP
Ella Toone makes history as she achieves World Cup feat no England player has before
Spain defy player mutiny to reach World Cup final and will face England or Australia
But ex-talkSPORT Breakfast host Laura Woods was quick to heap praise on Kerr following her wonder goal.
She tweeted: "Sam Kerr - absolute thorn in our side, again!!! But that was brilliant."
Meanwhile, Arsenal legend Ian Wright gushed over Kerr's first goal of the 2023 Women's World Cup.
He posted: "Unreal. Best in the world."
Most read in Football
England 3-1 Australia LIVE REACTION: Lionesses reach Women's World Cup final
Saudi want Alisson and Laporte, Chelsea to sign Lavia and Olise, Spurs step up Lloris exit
Women's World Cup final: Date, kick-off time and venue as England eye glory
Ella Toone makes history as she achieves World Cup feat no England player has before
It was a huge moment for Kerr, who has missed a large part of her nation's home tournament due to injury.
Speaking on talkSPORT commentary, Joe Shennan said: "75,000 people have gone mad.
"England are shell shocked, but maybe only had themselves to blame in the build up."
Lionesses icon Lianne Sanderson added: "Australia never looked like scoring at all.
"That's why they need a player like Sam Kerr. She can come alive when you really need her."
Social media was sent into meltdown over Kerr's cracker, as one user commented: "This Sam Kerr's goal is definitely the best goal of this tournament."
Another messaged: "That is why Sam Kerr is the best player on the planet…"
A third added: "Sam Kerr is the best player in the world. Pass it on!"