Fifth-seed Shelton secured a 6-2 6-3 victory over Learner Tien under the lights in Montreal on Wednesday, snapping a two-match losing streak against his compatriot.
The big-serving left-hander was rarely troubled, though he required courtside medical assistance in the second set after crashing into the back wall and cutting his elbow and left hand.
Shelton, 23, recovered quickly to close out the match and set up an all-American final with Nakashima, who earlier beat Spain's Rafael Jodar 7-6 (7-3) 6-4 to reach his first Masters 1000 final.
Nakashima, seeded 28th, found his range on serve early and took the opening-set tiebreak when Jodar sent a backhand volley long.
He had to work to seal the victory, needing five match points before firing down another booming serve that the Spanish teenager could only barely reach.
Nakashima, 25, has added greater variety to his game this season, a shift that helped him reach the semi-finals at Queen's Club and in Washington.
"Going into that last game I knew there was going to be some nerves," he told Tennis Channel.
"After the first few points it was obvious he wasn't going to be missing from the baseline so I knew I had to do something different and change it up."
Shelton has won all five of his meetings with Nakashima, their most recent encounter coming at last year's Canadian Open where he prevailed in three sets.
The last time there was an all-American final at an ATP Masters 1000 event was in Cincinnati in 2003 when Andy Roddick beat Mardy Fish.
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