Pouille fended off the Canadian's effort as much as possible during the match, including saving two break point opportunities from Raonic.
The 36-year-old, who by reaching the final had already guaranteed his return to world No. 1, supplanting Rafael Nadal when the new rankings are released on Monday, continued his domination over the Canadian with a 6-4 7-6 (3) victory.
The third set was tight all the way into the tiebreaker, with Federer erasing a 3-1 deficit.
Federer, in his first tournament since March, was trailing Nadal by 100 points at the start of the week and is guaranteed of taking the top spot on Monday regardless of how Sunday's final goes.
Raonic, plagued by injury over the past few seasons, is making his Stuttgart debut.
Roger Federer moved into the final of Stuttgart with three set win over Nick Kygios.
The Canadian seventh seed feels his game is starting to fire again.
"The most important thing is going to be to focus on my game and if I can do my things well", Raonic told reporters after the match.
The 35th-ranked Raonic beat the second-seeded Pouille for the third time without a loss in the series and said he is not allowing any thoughts of Queen's club next week or Wimbledon enter his mind.
"It's a really positive step forward for me", Raonic said. "There is a big difference between playing a semi and a final".
"So I'm very happy with myself and I hope I can continue to improve my level again tomorrow".
The Swiss great will play Milos Raonic as he bids for his 18th grass-court title.
It was the Thornhill, Ont., native's fourth straight-sets victory of the week as he reached his first final since the 2017 Istanbul Open.
Kyrgios won their first clash in Madrid back in 2015, 6-7 (2-7), 7-6 (7-5), 7-6 (12-10) but Federer hit back to take the victory in Miami past year, 7-6 (9-7), 6-7 (9-11), 7-6 (7-5).