The competition format retained the one used in recent editions, whereby the 10 teams were split into two Preliminary Round groups. All five teams from the higher-seeded Group A and the top three from Group B would advance to the Quarter-Finals.
Sweden finished first in Group B, scoring 17 times and conceding just twice in wins over Germany, Hungary, Japan and Norway.
Finland began with heavy losses to the United States and Canada, before beating the Czech Republic and Switzerland to avoid facing one of the North American sides in the last eight.
Those victories set up a local derby instead, in which the Finns showed why they belonged in Group A early on by opening a two-goal lead in the first period through Jeniina Nylund and Ronja Savolainen.
But Sweden were not going to take defeat lying down, hitting back with two goals in the first six minutes of the second period, courtesy of Ebba Hedqvist and Josefin Bouveng.
However, the 2019 silver medallists held their nerve and were back in front shortly after the midpoint in the match when Susanna Tapani found the net.
In the third period, the Finnish defence stepped up, allowing just one shot on target and conceding no powerplays to close out the narrow 3-2 win and book their Semi-Final place.
The remaining three spots in the last four will be decided later today when the United States face Germany, the host nation plays Switzerland and Canada takes on Japan.
Other than the 2019 edition when the United States beat Finland to the title, every other gold medal match at the IIHF Women's World Championship has been contested by Canada and the USA.
Finland have taken the bronze medals home 14 times, whilst Sweden's best result remains bronze, which they have won twice.
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