The German left-hander stunned the American powerhouse at Melbourne Park last year, upsetting her in the final.
The German left-hander stunned the American powerhouse at Melbourne Park last year, upsetting her in the final and ultimately dethroning her as the top ranked player in the world.
That win sparked a memorable season for Kerber, who followed it up by claiming the US Open, where Williams crashed in the semi-finals and has barely played since.
But Kerber has not had a good start to 2017, falling to Ukraine's Elina Svitolina in the Brisbane International quarter-finals last week, then slumping out in round two of the Sydney International to Russian teenager Darya Kasatkina.
Despite this, she remains upbeat as she prepares to mount her first Grand Slam title defence.
"I think Grand Slams are always completely different," Kerber said. "It doesn't matter how you play before."
She goes into the tournament as top seed with Williams second, meaning they are scheduled to meet in the final on January 28.
Williams, newly engaged to Reddit co-founder Alexis Ohanian, heads to Melbourne Park with little match practice after a four-month layoff.
Having won Wimbledon last year to match Steffi Graf's Open era-record 22 Grand Slam singles titles, two shy of Margaret Court's all-time mark, she didn't play again after Flushing Meadows in September.
She opted for the Auckland Classic as her comeback tournament last week but she was bundled out in just the second round, complaining loudly about the windy conditions.
Ahead of the defeat, the 35-year-old made clear that Grand Slams were what mattered at this stage of her career.
"Unfortunately I have the highest of goals and obviously that involves winning Grand Slams and that's all," said Williams.
Despite her recent lack of time on court, nobody will be writing off a veteran who is renowned for her fighting qualities.
Williams entered the Australian Open last year under an injury cloud having played few matches, yet went on to make the final.
Melbourne Park has been a happy hunting ground for her. She claimed her first Australian Open title way back in 2003, beating elder sister Venus in the final, and has since won five more.
Aside from Kerber, Polish world number three Agnieszka Radwanska, who lost to Williams in last year's semi-finals, Romanian pocket-rocket Simona Halep and Spain's Garbine Muguruza can all pose a threat.
Also keen to make her mark is Czech star Karolina Pliskova, who stamped herself as a major contender by winning the Brisbane International.
Pliskova had a breakthrough 2016, finishing runner-up to Kerber at the US Open and will start at Melbourne Park as world number five after leapfrogging Dominika Cibulkova in the rankings this week.
"The important thing is the draw. I need to have some players which I like, which is also important in a Grand Slam, to just have a little bit of luck with the draw," Pliskova said.
"But, I mean, anything is possible. So let's see."
Several notable players will be missing from Melbourne, including two-time Wimbledon champion Petra Kvitova who was injured by a knife-wielding intruder at her home in the Czech Republic last month.
Also out is pregnant two-time Australian Open winner Victoria Azarenka, along with five-time major champion Maria Sharapova, who is suspended until April after failing a drugs test at last year's tournament.
World number eight Madison Keys is another absentee after minor wrist surgery.