Federer ended the giant-killing run of Ukrainian Alexandr Dolgopolov when he cruised to a 6-3 6-1 victory in a one-sided semi-final that lasted just a tick over an hour.
Then Djokovic succeeded in blunting the booming serve of John Isner to beat the American 7-5 6-7(2) 6-1 and join Federer in Sunday's championship match.
It will be the 33rd time overall and the ninth time in a final that the pair have locked horns. Federer holds a 17-15 lead in their head-to head matches and they are tied 4-4 in finals.
The Swiss master has already won the Indian Wells title four times and made it through to a fifth final without dropping a set in the California desert this week.
Relaxed and super confident after winning his 78th singles title in Dubai earlier this month, Federer pounced on Dolgopolov from the outset, breaking him once to snatch the opening set.
"I was ready physically, mentally," said Dolgopolov.
"I wasn't nervous much, but I wasn't sharp enough. My concentration was going away for maybe one, two points every game, and you can't afford to have that in these matches."
The Ukrainian had beaten three higher ranked players, including world number one Rafa Nadal, to reach the semis but was powerless to stop the 32-year-old Federer, who fired down seven aces in a brilliant serving performance.
