The defending champion came back from a set down to claim victory over his Croatian opponent 4-6, 6-2, 10-6.
"I have loved playing here this evening in front of such special company,” said Henman. “I'm glad we could put on a good show, and of course I'm glad I'm in the final.”
Santoro progressed to the final after he thrashed former world number one and current South African Airways rankings leader Carlos Moya 6-2 6-3.
On Friday Moya also lost to Australian Mark Philippoussis in a closely fought third-set tie-break (4-6 6-1 10-8) and this latest loss wraps up his Masters debut.
Sunday’s Legends final will see the exciting tie of McEnroe against Mats Wilander, who saw off Henri Leconte 6-2 7-6(2) on Saturday.