The 53-year-old Borg, who won five consecutive Wimbledon championships from 1976-1980, was playing competitively in the United States for the first time in 10 years.
They played for almost two hours before McEnroe won the second-set tiebreaker.
"It's something special, the rivalry we have in the past with all those great matches" Borg said. "Every time we've played, it's produced great tennis. Even on the Champions tour, it's something special when me and John play. I feel it and John feels it. It's a nice atmosphere."
The 51-year-old McEnroe, who lost to Borg in an epic Wimbledon final in 1980, will play Mark Philippoussis in the final in the the over-30 event Sunday. Philippoussis beat Jim Courier in the other semifinal.
"Entertainment is about 15.3 percent of the match," said McEnroe about the Champions tour. "Most of it's pure play. Expect a couple yells and things like that. Expect a couple line questions. I like to play intense, so it's not as if it's atypical. That's the way I want to play."
McEnroe often mocked his own reputation for being cantankerous on the court. At one point, a child squealed just before he served and he yelled, "Quiet, please!"
He later sought applause from the crowd for a linesman who changed his call.
But there were flashes of the old McEnroe temper, especially after a ball that appeared to be long was called in on a break point.
"You can't miss those," he said. "But I guess you can and he did."
McEnroe said that shot and another later "allowed me to do the thing people want me to do," referring to his interaction with both fans and officials.
Borg said none of it bothered him. What did bother him was McEnroe's serve.
"John was serving extremely well the whole match," Borg said. "He put a lot of pressure on me."
McEnroe continually brought Borg in with drop shots.
"He moves better than I do," said McEnroe, who admitted drop shots are "somewhat cruel" on the Champions tour.