The second-seeded Seppi advanced after Horacio Zeballos retired while trailing 6-5 in the first set.
The Argentine had two set points at 5-4.
Fognini, seeded No. 3, defeated Martin Klizan of Slovakia 6-4, 6-2 for his 12th consecutive singles victory and his third semi-final at Umag.
Fognini won four consecutive games after trailing 3-1 in the first set.
Another four-game run in the second set at 1-1 set up the victory.
Results from the fifth day of the Croatia Open on Friday (x denotes seeding):
Fabio Fognini (ITA x3) bt Martin Klizan (SVK x6) 6-4, 6-2
Andreas Seppi (ITA x2) bt Horacio Zeballos (ARG) 6-5 - retired