The London Olympics silver medallist looked in great physical distress and finally decided to throw in the towel after lagging 7-12 in the second game. Saina had won the first game comfortably at 21-12.
Saina, the London Games bronze medallist, will take on sixth seed German Juliane Schenk, who beat eighth seed Yanjiao Jiang 13-21 21-14 21-15 in the other women's singles semifinal.
The Indian has a 5-3 record against the world number seven German. The last time, the duo faced each other was in Japan Open last year, where Juliane had the last laugh.
This is Saina's first victory over Yihan, who has scored six victories over the Indian so far in the past -- the latest was in the semifinals of the London Olympics in August this year.
The 22-year-old Indian was lagging 0-5 in the first game but she recovered brilliantly, pocketing six points on the trot. She then went into the break at 11-6.
After the break, Saina continued her fine run and held on to her lead and finally nosed ahead with four straight points.
In the second game, Saina once again opened up a healthy 9-2 lead. The Indian mixed her strokes well with deep tosses and accurate smashes and made her opponent move across the court with her cross-court play.
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