The Romanian fought back from 5-2 behind in the first set, reeling off eight straight games with a string of magnificent shots as her opponent’s game unravelled.
And Halep capitalised on the momentum to seal a 7-5 6-2 win and claim one of the biggest victories of her career.
"It's been an unbelievable tournament for me," Halep said. "I played really well tonight. When I was 5-2 down in the first set I told myself I have nothing to lose anymore, so I changed the tactics.
"I was still aggressive but played smarter - I started to play more crosses, more short crosses, and then I tried to finish the points with drive volleys. I also hit more drop shots as it went on too. I think I played a complete game tonight."
Radwanska added: "For sure the first set I should have won. I was 5-2 up. It was just one break, but that first set was mine. But she was playing really well today - everything was working for her.
"In some moments she was making unbelievable shots from nowhere from both sides and moving very well - at one point I didn't know what to do to finish the points, because she was just everywhere."
Earlier, Kerber had beaten fifth seed Jelena Jankovic 6-1 7-6(6) in the first semi-final.
"I will try to focus on my game (in the final)," said Kerber. "I will try to play aggressive, move well and just keep a consistent level, like I've played all this week, and use the momentum from today."