Sending Hyderabad into bat, skipper B K Venkatesh Prasad made use of the green top wicket and he claimed both the wickets that fell conceding 53 runs. The other two pace bowlers, Dodda Ganesh and Mansoor Ali Khan, failed to get any assistance from the strip.
Azharuddin and Laxman, who enjoyed lives, bettered the record of Vijay Mohan Raj and Narasimha Rao of 208 runs for the second wicket against Karnataka made in 1979-80.
Laxman, who was dropped when he was on 30 by Rowland Barrington off the bowling of Sunil Joshi, went on to score his 17th century and seventh this season, including three in a row, and his 358-minute undefeated knock was studded with 25 boundaries and a massive six off Sunil Joshi.
Azharuddin, playing his first Ranji semi-finals in 19 years, struck his 10th century studded with 14 boundaries.
Karnataka sorely missed speedster Javagal Srinath, who stayed out because of a groin injury, against Hyderabad's strong batting line-up.
The visitors lost the wickets of both the openers with Daniel Manohar making 39 and Nanda Kishore contributing 11.
Venkatesh Prasad, who is leading the side for the second time, bowled well in the opening spell and troubled the batsmen.
Azharuddin was lucky three times, as slip fielders failed to latch on to the chances.
Click here for Scorecard