Higgins beat Ding Junhui 6-5 in the semi-final.
The pair were equally matched throughout, with neither taking a decisive advantage.
Ding made an impressive break of 135 in the second frame followed by 107 two frames later, but Higgins continually pegged him back.
Champion of Champions
Higgins wins Champion of Champions with victory over O'Sullivan
12/11/2016 AT 17:19
Then in the final and deciding frame, Higgins's experience told as he pushed through to seal a place in the final.
He will face O'Sullivan, who beat Mark Allen 6-2 in the second semi-final, during which he recorded three century breaks.
The winner of the tournament on Saturday night will earn a cheque for £100,000.

Champion of Champions results/schedule

Monday, November 7
Afternoon session
Ronnie O'Sullivan 4-2 Robin Hull
Martin Gould 4-3 Mark Davis
Evening session
Group 3 Final (best of 11 frames)
Ronnie O'Sullivan 6-2 Martin Gould
Tuesday, November 8
Group 1 semi-finals (best of 7 frames)
Afternoon session
Neil Robertson 2-4 Stuart Bingham
Ding Junhui 4-2 Ali Carter
Evening session
Group 1 Final (best of 11 frames)
Stuart Bingham 4-6 Ding Junhui
Wednesday, November 9
Group 2 semi-finals (best of 7 frames)
Afternoon session
Mark Selby 4-0 Liang Wenbo
Mark Allen 4-2 Joe Perry
Evening session
Group 2 Final (best of 11 frames)
Mark Selby 5-6 Mark Allen
Thursday, November 10
Group 4 Semi-Finals (best of 7 frames)
Shaun Murphy 2-4 John Higgins
Judd Trump 4-3 Anthony McGill
Evening session
Group 4 Final (best of 11 frames)
John Higgins 6-4 Judd Trump
Friday, November 11
Afternoon
Semi-Finals (best of 11 frames)
Ding Junhui 5-6 John Higgins
Evening
Semi-Finals (best of 11 frames)
Mark Allen 2-6 Ronnie O'Sullivan
Saturday, November 12
Final (best of 19 frames)
Champion of Champions
John Higgins downs Judd Trump to set up Ding Junhui semi-final
10/11/2016 AT 17:29
Champion of Champions
Allen edges out Selby to set up O'Sullivan semi-final
09/11/2016 AT 17:53