Soderling disappointed a partisan crowd when he lost without taking the court Saturday, ending a solid first week in his first-ever Top 10 ranking.
"I'm sorry for Robin first of all," Baghdatis said. "It's not easy to retire, especially when you're playing at home (but) obviously I'm happy to get through to the final."
Baghdatis, a former Australian Open runner-up and a native of Limassol, Cyprus, continues his own comeback following an eight-month absence with an injury.
He will face Belgium's Olivier Rochus in Sunday's final.
Rochus was a 7-6 (7-4), 4-6, 6-3 winner over Brazilian Thomaz Bellucci.
Sunday's Rochus-Baghdatis winner earns $170,000.