American Williams, 39, has rediscovered her best form at Melbourne Park but faces a tough test against Osaka.
She has not played Osaka at a Grand Slam since the Japanese beat her in a dramatic 2018 US Open final.
The match was overshadowed by Williams' argument with umpire Carlos Ramos.
Williams called the umpire a "thief" after he deducted a point from her, and Osaka was reduced to tears by the crowd booing during the presentation ceremony.
"I think we both have had closure, and we have reached out to each other," Williams said of the match.