Peter Gerhardsson's side, seeking to go one better than Rio 2016 when losing to Germany in the final, will face Canada in the gold medal match.
United States, which had won 36 games in a row against Canada prior to the surprise 1-0 loss earlier in the day, will take on the Matildas for the bronze medal.
Fridolina Rolfo was on target twice when Sweden ran out 4-2 winner against Australia in the group stage and went closest to scoring in the first half of this semi-final showdown.
The Barcelona star thumped a shot against the crossbar from the edge of the box, though she did not have to wait much longer to find a breakthrough.
A heavily deflected shot from range bounced awkwardly off the wet surface and a back-pedalling Teagan Micah parried it onto the crossbar, with the ball looping back into play.
Stina Blackstenius helped the loose ball to Rolfo and the forward hooked a first-time shot away from Micah from four yards to score what proved to be the match-winning goal.
Australia enjoyed spells on top and will feel aggrieved that a sublimely-taken volleyed goal from Chelsea star Sam Kerr was waved away by the referee, who had spotted a foul during the preceding set piece.
A 96th-minute red card shown to Ellie Carpenter for dragging down Lina Hurtig signalled the end of the Matildas' hopes of reaching a first final.