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Defending champion Selby edged past Ding Junhui to set up a repeat of the 2007 showpiece against Higgins, who comfortably beat Barry Hawkins.
Scotland's Higgins last reached the final in 2011, when he beat Judd Trump.
"You'd favour Mark, because he has been more involved in the massive matches in recent years. I've not," said Higgins.
The final - the 41st to be held at the Crucible Theatre - starts at 14:00 BST on Sunday and will conclude on Monday.
Higgins features for the sixth time, and victory would take him second in the all-time list of ranking title wins on 29 - seven behind compatriot Stephen Hendry.
The 41-year-old, who has won three non-ranking events this season and beat Selby 18-13 a decade ago, added: "Mark will not go below a certain level, so I need to play better.
"I know what I need to do in the last, massive game to end the season.
"I am trying to stay focused and give it my all against the number one player in the world. Winning it would be my biggest achievement, without a doubt."
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Englishman Selby is attempting to become only the fourth player - after Hendry, Steve Davis and Ronnie O'Sullivan - to win consecutive world titles in the modern era.
He overcame a stern test against China's Ding, who he beat to claim his second crown in Sheffield 12 months ago.
The Leicester player has been in supreme form this season, winning four ranking titles and reaching the Shanghai Masters final.
Selby said: "It will be a fantastic occasion. I played in my first final 10 years ago against the same opponent and here we are on the 40th anniversary.
"John is a great player, one of the greats of the game. He has had a fantastic season and is in the final again. It will be another tough match for me.
"If he wins another world title, he will be equal with Ronnie O'Sullivan on five victories so he is trying to created history himself."
Former world champion John Parrott on BBC TV:
If there is one player whose game matches up to Mark Selby, who can match him in the safety and tactical departments, it is the man in the final with him - John Higgins.
The Scot is a consummate match player, we have all been there and played him and know what problems he causes his opponents. Higgins will be up for the fight.
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Four-time winner John Higgins says opponent Mark Selby is the "big favourite" for the World Championship final, which starts on Sunday.