The Serbian, who lost his world number one ranking to Britain's Andy Murray earlier this month, won two tie-breaks to win 7-6, 7-6.

After success over Austria's Dominic Thiem in his first match, he has now gone through to the last four with two victories from two in the Ivan Lendl group.

Raonic has never beaten Djokovic, who is looking for a sixth title at the season-ending event for the world's best top eight players.

If he wins the event, he will reclaim his number one ranking from Murray.

In the first set Djokovic saved three break points before winning the tiebreak 8-6 after a Raonic double fault.

The second set saw the Canadian twice recover breaks of serve, before he squandered a set point.

This allowed Djokovic to take the second tiebreak 7-5.

"Other than a couple of loose service games, I thought it was a good performance," said Djokovic.

"This definitely can serve as a great wind in the back for the matches to come."

Raonic, who defeated France's Gael Monfils in his first game, now faces a shoot-out against Austria's Dominic Thiem for the second semi-final spot.

Thiem beat Monfils 6-3, 1-6, 6-4 on the hard courts today to knock the Frenchman out of contention. 

Monfils will play Djokovic in his final match, while the John McEnroe group will resume tomorrow. 

Murray and Japan's Kei Nishikori will square off both looking for a second win, while Switzerland's Stan Wawrinka and Croatia's Marin Cilic will meet hoping to open their accounts.