Federer's 151st singles final on the ATP tour shaped as one of his biggest mismatches by ranking.
In the semifinals, Nishikori will meet Kazakhstani qualifier Mikhail Kukushkin, who battled back to survive Hungary's Marton Fucsovics 4-6, 7-6 (2), 7-6 (4) in a 3-hour, 17-minute marathon.
It still took him four match points over three games to get the job done against a player he beat in three sets in the first round of the Shanghai Masters this month. "I was a bit unsure of my serve and his return is excellent", said Federer.
Federer started his slow recovery with a break for 4-5; he then saved set points to level at 6-all, winning a game in which he double-faulted twice in a row and saved a set point with an ace. "I feel good right now".
The top seed grabbed a second break, with the Swiss serving out victory a game later on his first match point.
Earlier, Germany's world No.5 Alexander Zverev overpowered Spain's Roberto Bautista Agut to claim a straight sets 7-5, 6-3 victory for his place in the semi-finals.
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"It's very hard for me to explain how it feels like".
Federer's semifinals opponent will be seventh-seeded Russian Daniil Medvedev, a 6-4, 3-6, 6-3 victor over Greek fourth seed Stefanos Tsitsipas in the day's final match.
Just as Federer looked to be settling into form after almost 30 unforced errors in the opening set, more disruption ensued.
Nishikori, in his third final this season, is seeking his first title since 2016 and potentially a spot in the ATP finals. Federer though was fortunate to win the set even after making almost 30 unforced errors.
But Federer lost his edge once again after Simon broke en route to squaring the decider at 4-4. Federer stayed focused, breaking back with a smash victor in game seven and taking all the momentum, securing another break at 4-4 and closing the match on own serve in the following game after saving a break point, rattling off five straight games to secure the title in style and lift his 99th ATP trophy in an fantastic career.