Ivanovic - a 7-5, 6-7 (5/7), 6-2 winner over the 40-year-old Date Krumm - will face either Slovakia's Daniela Hantuchova or Russia's Alisa Kleybanova in Sunday's final for the title at the last event of the year.
The 23-year-old Ivanovic, the 2008 French Open champion, needed two hours and 23 minutes to end the chgallenge of Date Krumm, a fan favourite in Asia who is having her strongest season yet since coming out of retirement in 2008.
The Serb put the Japanese player under pressure throughout the match on her serve, having a total of 21 break points and converting seven of them, two in the final set which made the difference.
Ivanovic had a terrible start, losing her first two service games at love while Date Krumm held tough, saving three break chances in her first service game alone.
The Serb battled back to 5-all and then seized the set 7-5 on another service break in just under an hour.
The see-saw momentum continued in the second set, with the players trading breaks. Ivanovic had a match point in the 12th game but missed her opportunity, sending the pair into a third-set decider in their first-ever contest.
The Serb lifted the level of her game in the third with the two final service breaks to seal the win.
The victory was the 32nd of the season for Ivanovic, who has struggled since her breakthrough Grand Slam triumph two years ago and fallen to her lowest ranking of 65th early this season.
She has since bounced back to the world number 24 spot, thanks to a title last month in Linz, Austria, which qualified her for the eight-woman field in Bali - reserved for champions at WTA International-level events in 2010.
Ivanovic was just a toddler when Date Krumm made her WTA debut in 1989.
The Japanese player - once ranked fourth in the world - quit the tour in the 1990s, but has made a successful comeback over the past three seasons, pushing her world ranking back up to 53.