Swiss Bencic, who knocked out Japan's Kimiko Date-Krumm, the oldest woman in the draw in the first round, lost seven straight games before steadying to surprise the Chinese fourth seed with her tenacity in a tense second set played out in stifling heat at Rod Laver Arena.
Taken deep into the deciding tiebreak, Li sealed the match by crunching a backhand winner down the line.
Li will next face qualifier Lucie Hradecka or another Czech in 26th seed Lucie Safarova.
(Reporting by Ian Ransom; Editing by Patrick Johnston)
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