Vinci, ranked 43rd in the world, had never gone further than the quarter-finals of a major tournament before but the 32-year-old came from a set down to beat Williams 2-6 6-4 6-4.
It means Williams’ run of 33 consecutive grand slam victories comes to an end while Vinci will play fellow Italian Flavia Pennetta in today’s final.
“I never felt pressure. I never felt pressure playing this tournament,” said Williams. “She played literally out of her mind.”
After wrapping up her momentous win, Vinci broke down in tears, dumbfounded as she struggled to speak during her on-court interview.
“It’s an incredible moment for me,” Vinci said.
“It’s like a dream, I’m in the final, I beat Serena, it was an incredible match. When I served I was like voooooo, it was impossible.
“I tried to stay focused, not to think about the match or about Serena, she is an incredible player. It is the best moment of my life.”
Vinci added: “I am sorry for the American people, for Serena, for the grand slam, but today is my day, sorry guys.”
Williams opened with an ace, one of 16 she served in the match, but four baseline errors gave Vinci an early break and a 2-1 lead.
The top seed switched her racket at the changeover and it seemed to do the trick, as Williams broke back, winning five of the next six games to take the set with ease.
Vinci snatched the first break again in the second set and this time held on, surviving a break point at 5-4, to serve out and force a decider.
Williams vented her frustration, bashing her racket at the changeover for which she picked up a warning from the umpire. She then stormed into a 2-0 lead.
A Williams double fault handed the break straight back to the Italian, who was growing in confidence.
Williams cranked up the volume at 2-2 shouting and clenching her fist, but two games later Vinci responded in kind, cupping her ear to the crowd and pointing to her chest after finishing a scintillating point with a volley.
The drama was far from over as Vinci hustled, harried, chipped, and chiselled her way to a break of serve at 3-3 and then held serve to sit one game away from victory.
Williams held to put the pressure back on her opponent but Vinci showed nerves of steel at 5-4, producing two superb half-volleys to serve out and complete the most unlikely of triumphs.