It will be the first homegrown final since the tournament started in 2006.
"I think that's just fantastic,'' Ancic said to strong applause from the home crowd.
It will be the first matchup between them on Sunday.
Second-seeded Cilic beat Viktor Troicki of Serbia 6-2, 7-5, before the seventh-seeded Ancic needed more than three hours to defeat Hernych, of the Czech Republic.
Hernych served for the match at 5-3 in the third set, but Ancic broke and they went to a tiebreaker. There, Hernych had match points at 6-4 and 7-6, but Ancic saved them all, finally converting his third match point at 10-9.
Ancic served a dozen aces and saved eight break points. He has three ATP titles from 10 previous finals.
Cilic had an easier time against Troicki, who twice needed time outs for treatment on his ailing back.
"When I won the fifth game of the first set and made a break, everything turned fine,'' Cilic said.
Cilic, yet to drop a set in the tournament, will be playing in his third ATP final after winning in New Haven, Conn., last August, and at Chennai, India last month.
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