Top seed Federer edged past unseeded Czech Radek Stepanek 7-6, 6-2 but the best was saved for last as third seed Djokovic stunned world No 2 Rafael Nadal 7-5, 6-3.
For the second match in succession, Wimbledon champion Federer hit 13 aces, snuffing out the few opportunities Stepanek was able to force.
Stepanek, who had won 12 of his last 14 matches, had Federer 0-40 in the seventh game but the Swiss fought back.
Stepanek then saved three set points in the tiebreak before Federer rifled a forehand return for a winner to take the set and then broke twice in the second set.
Djokovic produced some inspired tennis as he beat Nadal for only the second time in seven meetings.
Nadal, the winner in Montreal in 2005, missed three chances to break the Serb in the 10th game and Djokovic made him pay, sealing the set when the Spaniard put a forehand wide.
Djokovic was the more aggressive player throughout and a netted drop shot from Nadal in the eighth game gave him a 5-3 lead and he served out for a place in the final.
Federer has won all four of his meetings with Djokovic but said he expected a tough match in the final.
“I think Novak's really playing well at the moment,” he said.
“He's got an all-around game, he's got a good serve and good return. Always makes you work hard.”
Djokovic, who won his first Masters Series title in Miami earlier this year, said he would be able to go for broke against the world number one.
“I have nothing to lose,” he said.
SHARAPOVA PULLSUP INJURED
LOS ANGELES: Top seed Maria Sharapova pulled out before her Los Angeles Classic semi-final against fellow Russian Nadia Petrova because of a strain in her lower left leg on Saturday.
The fourth-seeded Petrova will face third seed Ana Ivanovic of Serbia in the final, who had earlier fought off two match points to beat compatriot Jelena Jankovic 4-6, 6-3, 7-5.
Sharapova, who won last week's San Diego Classic, needed almost three hours to defeat Michaella Krajicek in the third round and survived a tough two-setter against Elena Dementieva in the quarter-finals.
“When I started to warm-up it got worse and worse,” Sharapova told reporters. “I could not run for more than two or three balls.”
World No 2 Sharapova was treated by a doctor and trainer for two hours, but still could not make it on court.Sharapova is not scheduled to play again until she defends her US Open title in New York from Aug 27.
Petrova trails Ivanovic 3-2 in career meetings, including a fourth-round defeat to the Serb at Wimbledon this year.—Reuters