Ljubicic, the world number 17, will confront the winner of the other, all-French semi-final between Jo-Wilfried Tsonga and Gael Monfils in Sunday's decider.
Twice a winner in Lyon (2001, 2009), Ljubicic triumphed in Metz in 2005 and reached the finals at Marseille and the Paris Masters the same year.
The 31-year-old, a recent semi-finalist in Stockholm and Beijing, continued his recent good form with a comfortable victory over Montanes, who may have been fatigued after ousting Russian top seed Nikolay Davydenko in the quarter-finals.
Ljubicic, the former world number three, sewed up the first set in 27 minutes despite converting only 45 percent of the points on his first serve.
The Croatian's serve was much more potent in the second set, and he finished the match with 18 aces, but his inability to kill off his opponent allowed Montanes to drag the set to a tie-break.