Williams, the only player to come into Saturday already in the semifinals, had trouble with Anne Kremer of Luxembourg in the first set, but closed out the match 7-5 6-0.
Henin, who played her quarterfinal match earlier in the day, was leading third-seeded Jelena Dokic 6-2 4-1 when the Yugoslav retired with a stomach virus.
Sunday’s final will be the third time this year that Williams and Henin have met in a final, with-the American winning both of their prior meetings.
Williams holds an overall 4-1 career edge over Henin with the Belgian winning their first meeting, and only one on clay, at Berlin last year.
Henin, who beat Silvia Farina Elia 6-4 6-4 in the quarter-finals on Saturday, was on top of Dokic from the outset.
The Belgian opened up to a 4-0 lead in the first set before Dokic held serve in the fifth and seventh games.
Henin jumped out to a 2-0 lead in the second set and kept the momentum going until Dokic walked away from the match.
Dokic had secured a semifinal berth earlier on Saturday with a 0-6 7-6 (7-3) 6-1 quarter-final victory over 10th-seeded Elena Dementieva of Russia.
In the other semifinal the 29th-ranked Kremer, who had beaten fifth-seeded Sandrine Testud of France 7-5 6-1 in the quarter-finals, manipulated herself into a position to serve for the first set at 5-3 against Williams.
However the world number two, despite having problems with her first serve (48 per cent) and making 18 unforced errors, fought back to capture the set.
She then cut her errors down to five and repaired her first serve motion to deliver the victory.
Friday’s results (prefix denotes seedings):
Semifinals: 1-Venus Williams (U.S.) beat Anne Kremer (Luxembourg) 7-5 6-0; 2-Justine Henin (Belgium) beat 3-Jelena Dokic (Yugoslavia) 6-2 4-1 retired with stomach virus
Quarterfinals: 2-Justine Henin (Belgium) beat 6-Silvia Farina Elia (Italy) 6-4 6-4; 3-Jelena Dokic (Yugoslavia) beat 10-Elena Dementieva (Russia) 0-6 7-6 (7-3) 6-1; Anne Kremer (Luxembourg) beat 5-Sandrine Testud (France) 7-5 6-1.
ESTORIL OPEN:
FINAL (Men): David Nalbandian (Argentina) beat Jarkko Nieminen (Finland) 6-4 7-6 (7-5).
Women: 4-Magui Serna (Spain) beat Anca Barna (Germany) 6-4 6-2—Reuters