Both ended German hopes in Saturday's semi-finals with Hewitt beating Benjamin Becker 6-7 (4/7), 7-6 (7/3), 6-2, and Federer seeing off Philipp Petzschner 7-6 (7/3), 6-4.
Six-time Wimbledon champion Federer, who only lost his number one status on Monday after going out in the quarter-finals of the French Open, will be bidding to notch up his 16th straight victory over the Australian in their 25th meeting.
"We've known each other for years and once played doubles together in Wimbledon and I always looked up to him," said the Swiss.
"It is something special to play against him."
Hewitt, the 2002 Wimbledon champion, said: "He's (Federer) obviously the best grass-court player around.
"It's a good test for me to go out there. I'm going to have to obviously play extremely well and execute what I want to do and try and put him under some kind of pressure."
Federer, 28, needed one hour and 31 minutes to get past Petzschner.
The Australian Open champion came back from a break down twice in the first set to win the tie-break and a break in the fifth game of the second set put him on the way to victory.
"He played great from the beginning and the first set could have gone either way," said Federer.
"I didn't know whether he was already playing his best tennis or whether he could improve further so I was a bit scared," he added.
The top seed is bidding for a sixth Halle title after winning in all his previous appearances in 2003-2006 and 2008.
The world number two has lost only one match on grass since 2003 (76-1 record), to Rafael Nadal in the 2008 Wimbledon final.
Hewitt, meanwhile, moved closer to 100 grass-court match wins as he improved to a 97-23 lifetime mark on the surface.
But it was not without a struggle as he needed more than two hours to get past 52nd-ranked Becker who claimed the first set in a tie-break after neither player was able to break serve.
The German came back from 3-5 down in the second set to force another tie-break. Eighth seed Hewitt got an early break in the third set and sealed the tie in two hours and 23 minutes.
Hewitt, 29, is bidding to win his first title since lifting the US men's clay court championship in Houston last year.