The 22-year-old Kenin, who followed her Grand Slam breakthrough at Melbourne Park last year with a run to the final at the French Open, sprayed 22 unforced errors in the 64-minute contest against the experienced Estonian.
Iga Swiatek, who became the first Polish player to win a Grand Slam singles title when she beat Kenin in the French Open final, was named the WTA's Most Improved Player of the Year.
Swiatek became the first Polish player to win a Grand Slam singles title when she beat American fourth seed Sofia Kenin 6-4, 6-1.
Unseeded Collins ended Tunisian Ons Jabeur's dream run to set up a clash with Australian Open champion Sofia Kenin.
Former French Open champion Jelena Ostapenko ousted second seed Karolina Pliskova 6-4, 6-2 in the second round.
The 21-year-old Kenin, seeded 14th at Melbourne Park, converted her second match point against the twice Grand Slam champion, who double faulted on the final point, to end an engrossing contest.
Sofia Kenin sent world number one Ash Barty spinning out of the Melbourne Park semi-finals 7-6(6) 7-5 on Thursday, crushing Australian hopes of a first home-grown champion at the Grand Slam in 42 years.
The former world No. 1 was knocked out of the French Open in the third round following a 6-2, 7-5 defeat by fellow American Sofia Kenin.