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Seven-time Australian Open champion Novak Djokovic has a couple of recent reminders that he won't have it easy against first-time finalist Dominic Thiem.

He may start raging favourite for an eighth Australian Open title but Novak Djokovic is painfully aware of the danger Dominic Thiem presents in Sunday's final.

Thiem won his place in the decider against Djokovic with a 3-6 6-4 7-6 (7-3) 7-6 (7-4) win over German Alexander Zverev in their Friday night semi-final.

But the fifth-seeded Austrian boasts an impressive recent record against world No.2 Djokovic, winning four of the past five meetings.

That includes their 2019 French Open semi-final in five sets and their ATP Finals clash in November.

"Dominic won our last match we played against each other, a close one in London," the Serbian said.

"He's definitely one of the best players in the world and deserves to be where he is."

Djokovic made his way to the final with a straight-sets win over an injured Roger Federer and said that before that match, he watched Thiem's winning encounter with world No.1 Rafael Nadal.

The Spaniard had beaten Thiem in the last two French Open finals but Djokovic was impressed by the 26-year-old Austrian, who won their quarter-final clash in four sets.

Djokovic said that the world No.5 had improved his hard-court play, with Thiem's 2019 title win at Indian Wells over Federer giving him more confidence on the surface.

"He played a terrific match against Rafa (Nadal)," Djokovic said.

"It seems like he's improved his game a lot on hard courts, because his game is more suitable to the slower surfaces - the clay of course being his favourite surface.

"But winning Indian Wells - beating Roger in the final - that probably gave him a lot of confidence that he can win big tournaments on other surfaces, as well."

Thiem, as well as Zverev, are among a select "next generation" group often touted as those most likely to finally end the grand slam domination by the big three of Djokovic, Federer and Nadal.

Djokovic said Thiem wasn't a "future star" .

"I don't think he's really anymore next generation," the 32-year-old said.

"He's already an established top-five, top-10 player and he played a couple of grand slam finals ... it's just a matter of one match here and there that can potentially give him a grand slam title, that he can actually get in the mix of top three in the world.

"He definitely has the game, he has the experience now, he has the strength.

"He has all the means to really be there."