Sindhu, seeded fifth, staged a remarkable comeback after losing the opening game to notch up a 16-21 21-16 21-19 win over Yamaguchi in a pulsating contest that lasted an hour and 16 minutes to make only her second semifinals appearance at All England.
The Indian had come into the match with a 10-7 head-to-head count against the Japanese even though she had lost the last three meetings.
This was Sindhu's first win in last four meetings with Yamaguchi.
"I am playing against her after quite a long time, I think 2019. We haven't played at all. I'm sure she would have trained very hard. Today's match was a good, tough long match I would say," Sindhu said.
"In the first game I was making a lot of errors and hitting them out because I was on the side with the stronger drift. The second game, it was in my favour. A lot of long rallies. It was important to get that second game.
"In the third game, it was very crucial. My coach was very supportive, he was making sure I controlled the shuttle well. Each point was very important. Overall, it was anybody's game but I am happy to be on the winning side."
The Olympic silver medallist will face Thailand's sixth seed Pornpawee Chochuwong for a place in the final. The Indian has an overwhelming 4-1 lead against the world No. 11 Thai.
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