Sindhu, who won back-to-back silver medals in the last two editions of the prestigious tournament, beat Yu Fei 21-7, 21-14 in a contest that lasted 40 minutes.
The 24-year-old will face Nozomi Okuhara in the summit clash on Sunday.
"I was prepared. Overall, the game went very well," said Sindhu.
"Anything can happen in the final. Focus and patience will be key."
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Olympic silver medallist Sindhu, who came into the match with a 5-3 head-to-head record against Chen, grabbed the initiative quickly.
The Indian dished out a compact game, producing angled returns to push Chen to the corners. Sindhu retrieved well and punished any weak return from her rival to dominate the rallies.
Sindhu entered the first break with a 11-3 lead after the Chinese went wide.
Chen continued to find the going tough as she missed the lines, allowing the indian to gather points at will.
Another weak return at the net by Chen gave Sindhu as many as 14 game points. The Indian then sealed the opening game in her second attempt.
Chen made a better start in the second game and was neck-and-neck at 3-3 with Sindhu, but the errors again crept in her game as Sindhu moved to a 10-6 lead.
Sindhu exploited a weakness in the backhand side of Chen to lead 11-7 at the breather.
The Indian worked hard during the rallies, not giving an inch to her Chinese rival and was rewarded for her effort. Chen committed too many unforced errors in her desperation as Sindhu jumped to a 17-9 lead in a jiffy.
The Indian eventually grabbed eight match points with a cross court smash. Chen saved a couple before hitting long again as Sindhu celebrated.
(With PTI Inputs)