The British number one battled to a 6-4 3-6 6-3 victory over the Canadian second seed in two hours and 19 minutes in the second semi-final in Los Cabos, Mexico.
Norrie's success, his first over Auger-Aliassime in five meetings, kept the third seed on course for a third ATP Tour title this year.
He will now face world number one Medvedev, who saw off fourth seed Miomir Kecmanovic 7-6 6-1 to guarantee top spot in the world rankings until at least the end of the US Open next month.
"Felix has got me the last four times, so going into it I really wanted to win that one," Norrie said.
"Previous times I had match points, so I was thinking about that in the back of my mind. It's never easy.
"You always want to defend the title but it is complicated. The start was difficult but I played very well after losing the second set.
"I try to play in my best level and it is incredible to return to the final. I love playing in Mexico."