The two-time world champion was overcome 6-5 by fellow Englishman Crabtree at Robin Park Leisure Centre in Wigan.
It marks the second straight year in which Littler has fallen at the semi-final hurdle after a last-leg decider.
Littler came through the group stage with three victories before surviving a scare against 16-year-old Lewis Cook in the round of 64.
'The Nuke' picked up wins over David Fidler, Archie Self and Harrison Leigh to make the final four, where he came unstuck against Crabtree.
Crabtree, 23, will play Germany's Jan Schmidt in the final, which takes place on Sunday, November 29th in Minehead.