Williams, the , thrashed Judd Trump 6-1 in the second semi-final, with Trump managing a top break of just 19 in the first three frames.
A break of 51 gave Trump a glimmer of hope going into the mid-session interval, but the veteran Welshman - who made a break of 109 in the second frame - took the next three frames for a comprehensive victory.
Williams has already had his best season in many years, having won the Northern Ireland Open – his first ranking title since 2011 – as well as the Six Red World Championship.
Now the 42-year-old is eyeing his 20th career ranking title when he takes on Dott, who is two years his junior. They have never met in a ranking final and on Sunday there's a top prize of £80,000 on the line.
Williams is also hoping to land the German Masters for the second time, having captured the crown in 2011, the first time it was held at the Tempodrom.
“I didn’t play too well but Judd looked nervous from the start, maybe he expected to steam-roller me,” said Williams after reaching his 32nd ranking final.
“I managed to keep things tight and get on top, I knew he would go for crazy balls. He seemed to give up towards the end. There were a couple of scrappy frames that could have gone either way. My safety was good.
“I can’t believe I’m in another final. I’ll keep riding the wave until it comes crashing down.”