Ferrer had won his last 14 matches at Valencia before dropping a 7-5, 1-6, 6-3 decision to Monaco. The Spaniard had six double faults and had his serve broken five times en route to his third straight head-to-head loss to Monaco.
It is the 27-year-old Argentinean's first ATP World Tour final since Santiago back in February 2010.
Monaco will face unseeded Spaniard Marcel Granollers after he pulled off his own upset of sixth-seeded Argentinean Juan Martin del Potro.
Granollers had already upended the seventh-seeded Alexandr Dolgopolov in the first round and the No. 3 seed Gael Monfils in the quarterfinals before earning a 6-4, 7-6 (7-4) victory over del Potro in the semis.
This will be Granollers' second straight trip to the final at Valencia. Monaco and Granollers have met just twice before and have split the two meetings.
The 2011 Valencia titlist will collect $455,000.