Serbia's world number one, who will be supplanted by Nadal at top of the ATP rankings on Monday, won a high-octane first-set tiebreak before wearing Dimitrov down in the second set.
Djokovic will face Canada's Denis Shapovalov in Sunday's showpiece at Bercy after 19-time Grand Slam champion Nadal, who would have secured the year-end number one spot with the title here, withdrew minutes before his semi-final match.
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Top seed Djokovic, who has lifted the trophy here four times and will feature in his 50th Masters final, played better in the key moments and served well throughout.
There were no break points in the first set.
In the tiebreak, Dimitrov moved 5-3 up after an untimely Djokovic double fault, only for the Serb to regain his composure, levelling for 5-5 with an exquisite defensive lob and winning the set at the end of a lung-busting 35-shot rally.
Dimitrov let his guard down in the fifth game of the second set, allowing Djokovic to snatch the only break of the match.
The 16-time Grand Slam winner held serve throughout to strengthen his hopes of ending the season as world number one.
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