Top-ranked Azarenka has lost 11 of her 12 matches against Williams, who increased her career haul to 15 Grand Slam titles last year by winning at Wimbledon and the U.S. Open. Williams has won five Australian titles, more than any other woman in the Open era, and is in dominant form after winning 35 of her past 36 matches.
That run included a 6-2, 2-6, 7-5 comeback victory in the U.S. Open final after being just two points away from defeat to Azarenka.
No. 2-ranked Maria Sharapova, the French Open champion, is on the other half of the draw with No. 4 Agnieszka Radwanska, No. 5 Angelique Kerber and No. 6 Li Na. She could meet Venus Williams in the third round.
Sharapova, runner-up to Azarenka last year at Melbourne Park, will meet fellow Russian Olga Puchkova in the opening round.
''I don't pay attention too much to the draws because we could face anyone from the first round to the finals, and you have to be ready to face that opponent,'' Sharapova said.
Novak Djokovic's bid for a third consecutive Australian Open title got a boost when No. 2-ranked Roger Federer and U.S. Open champion Andy Murray both landed in the other half when the official draw was made Friday.
Top-ranked Djokovic will face Paul-Henri Mathieu in the first round and also has fifth-seeded Tomas Berdych in his quarter of the draw and fourth-seeded David Ferrer in his half.
Ferrer is the highest-ranked Spaniard in the tournament in the absence of 11-time major winner Rafael Nadal, who hasn't played on the tour since the middle of 2012 due to a left knee injury.
''He was a top-20 player before. He knows what it's like to be on the big stage. He has a lot of quality - a lot of experience,'' Djokovic said of Mathieu. ''There are expectations for someone who is in my position, but I am looking forward to it.''
Federer will play Benoit Paire of France in the first round and has a potential third-round match against local hope Bernard Tomic. Federer, a four-time Australian Open winner, could face Murray in the semifinals.
Murray, who ended a 76-year drought for British men at Grand Slam events when he won the U.S. Open last year, will start his run against Robin Haase of the Netherlands and has a potential quarterfinal against sixth-seeded Juan Martin Del Potro, the 2009 U.S. Open champion.
On the women's side, Azarenka has a first-round match against Romania's Monica Niculescu and is in the same quarter as former No. 1-ranked Caroline Wozniacki and seventh-seeded Sara Errani.
Serena Williams will play Edina Gallovits-Hall of Romania in the first round and is in the same quarter as 2011 Wimbledon champion Petra Kvitova and 19-year-old American Sloane Stephens, who is seeded 29th.
Kvitova has a tough opener against 2010 French Open champion Francesca Schiavone.
(For more sports news and updates, follow Ahram Online Sports on Twitter at @AO Sports and on Facebook at AhramOnlineSports)