The match began nervously for Wilson, who had the first chance in the opening frame but missed a red with the rest at 20, a lapse Wu punished ruthlessly with a composed break of 75.
Wu nearly doubled his advantage in the second, threatening to steal the frame from 51-0 behind, but a missed third-last red opened the door for Wilson to level at 1-1.
Frame three was decided on the final pink, Wu rattling a mid-range attempt to the top corner, allowing Wilson to pot to the centre pocket and edge in front. Wu responded by compiling a break of 69 to restore parity at 2-2, before Wilson regained the lead with a fluent 76.
In frame six, Wu was on 24 when he missed an awkward red to the centre pocket, and Wilson capitalised fully. A break of 74 put him 4-2 ahead and seemingly in control.
Leading 32-1 in frame seven, Wilson misjudged a short-range red, and Wu punished the error with a 74 clearance to close the gap. The Chinese debutant carried that momentum into frame eight, producing an impressive 87 to draw level at 4-4.
Wu then moved to the brink of victory. His break of 58 in frame nine was enough to take the lead for the first time since the early stages, leaving Wilson one frame from elimination.
Frame 10 appeared set to deliver the upset. Wu led 44-11 with the balls invitingly placed, but missed a straightforward red to the top corner. Wilson seized the reprieve, producing a superb 46 clearance that included a delicate shot to manoeuvre the blue away from the cushion, forcing a deciding frame.
A safety error from Wu early in the decider gave Wilson the opening he needed, and he responded in emphatic fashion. A commanding break of 116, his sixth century of the tournament, carried him over the line and brought the Alexandra Palace crowd to its feet.
"Wu Yize is going to be around for many years to come," Wilson told BBC Sport afterwards.
"I just wasn't at the races at all today, and I don't know where I found those last two frames. Wu let me off the hook a little bit. The same as Neil Robertson - it looked like it was going to be all over, and I was going out.
"Sometimes the snooker gods are on your side, and you just have to make the most of it. It's an awesome achievement in itself to make back-to-back finals, but that's not what I'm in the game for. I don't want to leave it there.
"I think I put myself under too much pressure because I am desperate to play John Higgins in the final. An all-time legend. That's something I'll savour."
The victory sends Wilson into his third career Masters final. He was beaten 10-7 by Mark Allen in 2018 and by Shaun Murphy by the same scoreline last year.
Sunday's final, played over 19 frames, carries a £350,000 winner’s cheque and the Paul Hunter Trophy.