With the win, Federer will regain the No. 2 ranking he lost when he was beaten by the Serb in the U.S. Open semifinals in September.
Murray dispatched Juan Monaco of Argentina 6-4, 6-1 in the other semifinal to reach his fourth final of the year.
Federer could capture the 64th title of his career Sunday, moving into a tie with Pete Sampras for fourth place on the all-time list.
Murray has won seven of their 12 career matches, including the last time they played in the Toronto Masters final in August -- Murray's only title of the year.
Federer was under pressure at the start, fighting off four break points in a tight third game before holding when Djokovic hit a forehand long.
The Swiss player then began attacking the net more, setting up a break point of his own at 5-5 with a backhand-approach shot that Djokovic hit into the net. He converted when Djokovic put another shot in the net.
Federer broke twice more in the second set to take a 4-1 lead and sealed the match, his 11th victory over Djokovic in 17 meetings.
"I think the first set could have gone either way," Federer said. "It was really an open battle. I got the better of him at the end of the first set. I think for 10 minutes he was a bit out of it and I was able to take advantage of that."
Djokovic, who had been attempting to capture back-to-back titles in China after winning last week in Beijing, said losing the first break was the key to the match.
"The start of the second set, I lost my focus a little bit, my energy dropped," he said. "Yeah, in a blink of the eye, I was two breaks down at 4-1."
Murray broke Monaco's serve early in the first set before taking a 5-2 lead. But he committed four straight errors when trying to close out the set and dropped serve for only the second time all week.
Murray turned it around with defense in the next game. After breaking a string, he saved three overheads with backhand lobs before Monaco finally missed a smash wide. Monaco dropped seven of the next eight games to lose the match.
"I chased a lot of balls down, he made a few mistakes," Murray said. "Points like that can sort of change matches a little bit. But I was still feeling quite comfortable, even at that stage."
Monaco said he couldn't recover from losing the exchange.
"I was totally unfocused after that," he said. "I have like five smashes and I couldn't finish the point. Then it was tough for me. He broke. He won that set."
Monaco, who was sidelined for three months this summer with a wrist injury, upset 13th-seeded Jurgen Melzer in a nearly three-hour battle in the quarterfinals Friday.