Croatia's Karlovic, playing well after missing 2 1/2 months with viral meningitis, reached the final with a 6-4, 6-7 (4-7), 6-3 decision over second-seeded South African Kevin Anderson.
The 34-year-old will be seeking his first championship since winning the 2008 ATP Tour event in Nottingham, England.
His opponent will be Colombian crowd favorite Falla, who beat Canadian Vasek Pospisil 6-7 (4-7), 6-3, 6-4 in Saturday's other semifinal.
He became the first Colombian to reach an ATP final since Santiago Giraldo in Santiago in February 2011.
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