France's Cornet was leading 7-6 (5), 1-0 when Bouchard retired with an upper thigh issue in Gstaad. The Canadian, who reached the Wimbledon final in 2014, has struggled with a multitude of injuries over the past 18 months and had dipped to No. 193 in the world rankings ahead of the grass-court season.
Bouchard, 24, is currently ranked No. 146 but is now expected to move up to world No. 123 when the latest WTA rankings are published Monday.
Cornet, 28, is aiming for a sixth WTA title and will face Mandy Minella in the final. She will contest her first final since Brisbane in January 2017.
"The first set was really tight. She [Bouchard] was playing very well and very aggressive. I couldn't see that she was injured, but I'm very happy that I won the first set," Cornet told the WTA's official website.
"You never know, if she had won the first set, maybe she would have kept going. She was playing amazing. I'm glad to be in the final... and I hope I can get to the trophy."
Luxembourg's Minella, 32, came from a set down to beat Marketa Vondrousova 4-6, 6-2, 6-2 and reach her first career singles final.
Minella said: "I'm shaking, but I'm still very happy. She got me on the back foot from the beginning. She played very fast, so I didn't feel as good as the other days because I didn't have time to play. It was just different, and I had to fight into the match."