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Massaro was taken to a final-game tie-break before beating Egypt's third seed Raneem El Welily 11-2 7-11 11-9 6-11 12-10 in a dramatic semi-final.
Massaro, 32, will look to emulate her 2013 success when she beat Egypt's El Sherbini to become world champion.
El Sherbini beat compatriot Nouran Gohar 11-5 11-5 11-5 in the last four.
The 20-year-old, who knocked out Malaysia's eight-time champion Nicol David in the quarter-finals, is attempting to become the first Egyptian woman to win the world title.
She has an 18-1 win-loss record this year, including a win over Massaro in the Windy City Open semi-finals in Chicago last month.
Speaking about her 61-minute semi-final win over El Welily, Massaro said: "She played well in patches, I played well in patches and in some ways it's a fair result.
"I've played two World Championship semi-finals on a tie-break against her so I guess that was going through my mind because, if I had done it before, I knew I could do it again."
England's world number one Laura Massaro will face Nour El Sherbini in Saturday's final of the Women's World Squash Championship in Malaysia.