Arruabarrena, a three-time finalist at the event, broke to lead 5-4 in the first set but wasted two set points as world No.138 Sharma struck back and swept through the second set in style.
“The most important thing this week has been keeping myself really good mentally,” Sharma, who will reach a new career-high ranking come Monday, said.
“Staying calm, staying positive, not thinking too much or getting too negative on court. I’ve just been really solid and consistent, point by point.”
In the final Sharma will face sixth-seeded Amanda Anisimova with both players chasing a maiden WTA title.
American teenager Anisimova came from a set down to beat Brazilian qualifier Beatriz Haddad Maia 4-6, 7-6 (7-2), 6-2 the semi-finals.
Meanwhile, Jordan Thompson’s hopes of a maiden ATP title were ended on Saturday in the quarter-finals of the US Men’s Clay Court Championship in Texas.
Australian seventh seed Thompson was beaten 6-1, 4-6, 6-4 in a rain-delayed showdown with Colombian qualifier Daniel Elahi Galan.
Their match began a day earlier and was suspended in the third set.
Galan backed up later on Saturday against Norwegian Casper Ruud but his unexpected run – which included a win over top-seeded Steve Johnson – came to a crashing halt.
The 20-year-old Ruud took just under 90 minutes to defeat the world No.241 Galan 7-5, 6-2 and book his spot in the final.
In the other half of the draw, Chilean Christian Garin powered past eighth-seeded Sam Querrey 7-6 (7-2) 6-2 to make his second ATP final.
Garin made his first final last month at the Brasil Open and is projected to move inside the top 50 if he wins the tournament on Sunday.