After a gruelling four-hour semi-final in Melbourne, the Scot will now face world number one Novak Djokovic in tomorrow's final.
He beat the Serb in September to win his first major title – the US Open.
Murray beat Federer in a five-set thriller – 6-4, 6-7, 6-3, 6-7, 6-2 – to reach his third Australian and sixth Grand Slam final.
But the Dunblane star knows he must be at his best again if he is to dethrone defending champion Djokovic. Murray, the world number three, said: "I'll have to be ready for the pain. And I hope it's a painful match because that means it will be a good one."
Murray said he might find it easier to close out Djokovic because there won't be as much pressure on him to win his second Grand Sl am.
But he added:"To get into that position I am going to have to play an unbelievable match. And I'll need to recover well as this was a long, long semi-final.
"Djokovic plays great here and this is his third Australian final in a row. I will have to play my best to win."