The six-time Grand Slam winner, who last suffered defeat in the US Open final against Rafael Nadal, overcame an inspired Federer before finally taking victory 4-6, 6-3, 6-2 in just over two hours.
He now takes on either Rafael Nadal or David Ferrer in Sunday’s final at the Bercy arena, as well as keeping his chances alive of reclaiming the world number one spot.
The 26-year-old Belgrade native had to reach the final in the French capital to have a chance of snatching back top spot from Nadal at next week's World Tour Finals.
Swiss legend Federer came out flying and took the first set in dramatic fashion when he saved four break points at 5-4 up before converting his second set point when the Serb overhit a backhand that flew out the back of the court.
Rohan Bopanna and his French partner Edouard Roger-Vasselin lost their Paris Masters men’s doubles quarterfinal tie here.
The fifth seeds dragged the match to the third set on Court 1 but lost to Croatian-Brazilian fourth seeds Ivan Dodig and Marcelo Melo. Dodig-Melo won 7-6(5), 3-6, 10-4 on Friday. After sharing a set each, Dodig and Melo went all out in the super tie break.