Wildcard Chan, playing on home soil, claimed surprise wins over Patricia Mayr-Achleitner and Alla Kudryavtsev to reach the last four, where she took the scalp of Friedsam with a 6-3 4-6 6-3 success on Saturday.
Friedsam was the favourite to secure her second WTA 125k series title of the season, but instead it is world number 212 Chan who will line up in Sunday's final.
The Taiwanese outsider has enjoyed more success in doubles in recent times, but has a singles title in her sights following a clinical display in which she took five of the six break points she fashioned.
Chan also saved eight break points to thwart Friedsam, ranked 87th in the world, and the home hope sealed a popular victory in two hours.
Sixth seed Diatchenko will be aiming to bring 26-year-old Chan back down to earth in the final.
The Russian also need three sets to progress to the showdown as she accounted for qualifier Ana Bogdan 6-4 3-6 6-3 in two hours and 16 minutes.
Diatchenko, who beat second seed Luksika Kumkhum on Friday, has only one WTA singles title to her name.
World number 108 Diatchenko secured seven breaks to the plucky Bogdan's six and held her nerve to win the deciding set after the Romanian, ranked 241, had shown fight to win the second set.