Thiem impressed throughout the match and rallied after failing to convert four match points in the second set tiebreak, eventually prevailing 7-5 6-7(10), 7-6(5) in two hours and 54 minutes.
Thiem has transformed himself on hard courts in recent seasons and this match was a perfect example of that, as he went toe-to-toe with Djokovic throughout and saved all three break points against him with some strong serving.
The Austrian, who won his first Grand Slam at the US Open this year, is in the final for a second time at this tournament and will be hoping to go one step further after losing to Stefanos Tsitsipas in a final set tiebreak last year.
Djokovic was aiming to equal Roger Federer’s record of six ATP Finals titles this week though once again fell short, and has now not one this title since defeating Federer in the final five years ago.
The Serbian is generally reliant on his strong returning though was able to create just three break points today, looking ineffective at times and regularly unable to penetrate Thiem’s serve consistently and at potential openings.
Thiem will face either Daniil Medvedev or Rafael Nadal tomorrow in the final, with their semifinal taking place later tonight.
Thiem battles from the brink to reach final
Djokovic had prevailed when the two last played back in February in a five-set Australian Open final, but Thiem had sealed victory in a high-quality three-set encounter at this tournament 12 months ago and this contest was just as tight as that meeting.
Most of the first set was dominated by serve with no break points created in the opening 10 games and most service games being held comfortably, with Thiem pulling through tight service games at 2-3 and 4-5 after some careless unforced errors saw him taken to deuce.
The Austrian was able to reign in those unforced errors at precisely the right time as he converted the first break point of the contest to break at 6-5, and faced little resistance from Djokovic as he held comfortably to take the opening set in 52 minutes.
Djokovic saved a break point in the fifth game on the second set to avoid falling behind, and started to create more chances as he held a first break point at 4-3 and then held two set points on the Austrian’s serve at 6-5 as he began to find a bit more traction when returning.
Thiem saved all those opportunities against him and had four match points in the tiebreak, but a double fault on one of them showed just how tight he was and the world number one was able to capitalize, converting a fourth set point to force a deciding set.
Unsurprisingly the decider followed a similar pattern to the first two sets, with opportunities to to break few and far between until the eight game of the set, where Djokovic was able to hold after being forced to deuce by the US Open champion.
With no breaks of serve a deciding set tiebreak ensued just as it had 12 months ago and it was Djokovic who took control by winning the first four points, though Thiem took six points in a row and converted a sixth match point to seal victory.