Wawrinka finished second in Group A after a 6-3 4-6 6-3 victory over Croatian Marin Cilic in London on Friday.
The Swiss Australian Open champion faces countryman Federer in the last four looking for an upset win.
Despite losing 14 of their 16 previous meetings, Wawrinka has the belief he can upset Federer.
"I believe I can beat him," he said.
"I've been seeing him playing last few months. He's playing great. He's playing amazing tennis, especially indoor. He loves the place here.
"It's going to be a tough match for me. But I will have to play my best game if I have a chance to beat him. I know I can do it. I know it's going to be very difficult."
Wawrinka was happy to claim his win over Cilic despite being below his best.
As for the US Open champion, who finished the event with an 0-3 record, he was happy with his improved performance.
"I was eager to play better," Cilic said.
"That's what I was focused on to finish the season with a good match. So I was happy with my performance today."