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The two played out a thrilling first two sets, with Medvedev taking the lead before Djokovic fought back to level the match via a tie-break.
However, the Russian was unable to continue after sustaining a leg injury, keeping Djokovic in the hunt for back-to-back titles when he competes in the showpiece, where he will face Stefanos Tsitsipas.
"I really hope that his injury is nothing too serious,” Djokovic said referring to Medvedev's misfortune. "I know Daniil, he's a great guy, he's a fighter, he's a big competitor.
"He wouldn't retire a match if he didn't feel that he [could] continue or [if it wouldn't] worsen his injury. He told me that he pulled an adductor muscle in his leg.
"It was such a close match, particularly in the second set. I would probably say he was a better player on the court in both sets. I was fighting and trying to find a way.
"I found a way to win the second, but I'm just sad for the tournament and for these people who were enjoying the battle, and for Daniil that it had to end this way."
No.3 seed Tsitsipas started slowly in the first set against Andrey Rublev but managed to triumph 4-6 6-4 6-3 in the other semi-final.
"My mentality kind of changed," Tsitsipas, who will seek his first ATP 500 title at the ninth attempt, said. "I played with more of an aggressive game style and didn’t have anything by luck."
At the Japan Open, Taylor Fritz battled back from 3-1 down in the deciding set against Denis Shapovalov to claim a 6-3 6-7 (5-7) 6-3 semi-final victory and book his place in his third ATP Tour final this season.
No.3 seed Fritz faces an all-American clash in the final against Frances Tiafoe, who dropped his first set of the week as Soonwoo Kwon bageled him, but the US Open semi-finalist recorded a 6-2 0-6 6-4 win.
"It was a weird match, but I'm happy to get through," Tiafoe, who progressed into his second final of the season and fifth overall, said.
"It's not always going to be pretty, it's not always going to be the best stuff, but a win is what matters."