With a tighter defence and precision shooting, Italy's women edged out Russia in the first semi-final match, winning 12-9.
The champions at the 2004 Athens Games, Italy's women's water polo team has failed to make the podium in any Olympics since then.
The United States, tournament favourites and London 2012 gold medal winners, face Hungary later on Wednesday to determine who will face Italy in Friday's final.
Though the U.S. team made quick work of Brazil in their last game, Hungary could be a stronger adversary. In the quarter-finals the Eastern European team defeated Australia.
(Reporting By Joshua Schneyer; Editing by Jan Harvey)
