She will play either Kiki Bertens or Sloane Stephens - who she beat in last year's French Open final - on Saturday.
"I'm really happy as my serve was my biggest concern coming in", she said after losing for the second time in two months to Switzerland's Bencic who also triumphed in Indian Wells.
"I know it's going to be a tough battle".
"I am really proud of this week".
"She played better tennis tonight". No. 4 in the world on Monday, so it's, yeah.
"I couldn't believe at the beginning I would be in the final, so I will just calm down, I will analyze more and I will be nicer to me because I don't deserve to be very hard".
"There's a lot of happy things to take from this because I lost in the first round a year ago so anything is an improvement, honestly". "She deserved to win the match, definitely", she said.
"Maybe a little bit lucky like on the 4-3 game when I hit the ball in the fence and it hit her, but sometimes you need a little luck", she laughed. "I don't know, it is just all wonderful things". In this season Simona played and lost the final in Doha against Elise Mertens (in her career she won 18 titles in 24 finals played), while Bertens played and won the final in St.
The 23-time grand slam champion will do battle with her older sibling 21 years after their only other previous match in Rome, which Venus won at the quarter-final stage.
The second set began in similar fashion, a break apiece, but this time, it was Bencic who looked the bolder, stronger and more creative with her tactics.
Stephens comfortably saw off Croatian Petra Martic 6-4, 6-3 to set up a semi-final with Bertens after the Dutch seventh seed stunned world number two Petra Kvitova 6-2, 6-3 in Thursday's late match under the floodlights.
Halep was chasing her third success in four years in this tournament but delivered the sort of patchy, disgruntled display that has hindered her before with a trophy in sight.
The Belgian saved eight match points to force a decisive tie-break, with Venus unable to shake off an opponent 15 years younger than her. "I don't think that's going to change", said Bencic.
"I wanted to do that but I was thinking about it while I was playing, which wasn't necessarily a good thing". I played stupidly today, I did everything that she liked.
Romania's Halep will overtake Naomi Osaka at the top of the rankings if she wins the title.
"I think she played better tennis tonight", said two-time Madrid victor Halep.