Saina, the 12th seed, lost 21-12, 17-21, 10-21 in an hour and 14 minutes to the 2016 Olympic bronze medallist, who became the first Japanese to reach the World Championships women's singles final.
World Championships 2015 runner-up Saina, who had a 6-1 head-to-head record against Okuhara coming into this game, started strongly, winning the first game 21-12 as the Japanese struggled to get into her rhythm.
The 22-year-old Japanese struggled with her net play and a few erratic line judgements to trail 6-11 which became 6-15 before losing 12-21.
Okuhara got off to a flying start in the second game, taking a 4-0 lead but the 27-year-old Saina fought back and equalised at the nine-point mark.
Saina kept pace with her younger and sharper opponent but she got tired towards the end. At 17-all, Saina wasted a great chance to take the lead as she fired a smash wide right.
Then, Okuhara claimed three consecutive points as she showed more energy and agility as a tired Saina failed to stop her from dictating the rallies.
In the third game, Okuhara completely dominated and her fast-paced game didn't allow Saina to get back into it.
Saina struggled with movements and failed to reach for Okuhara's delectable drop shots.
Okuhara, the 2012 world junior champion, raced away to an 11-4 lead and afterwards it was just a matter of time before the Japanese sealed the game at 21-10 and with this a place in the final.
Okuhara will meet the winner between India's P.V. Sindhu and Chinese rising star Chen Yufei in the final on Sunday.
Meanwhile, men's singles defending champion Chen Long of China was ousted by Viktor Axelsen of Denmark. The Danish third seed crushed the 2016 Olympic champion 21-9, 21-10 in 39 minutes.
Axelsen, who won the bronze in the 2014 worlds and 2016 Rio Olympics, was quoted as saying by Xinhua news agency: "I am still a little out of words, I never expected to win that comfortably, I am very happy. I made little mistakes today and made very few errors.
"It was nice to get revenge from the Olympic semi-finals, I am very proud of myself.
"My coach and I always look back at past championships to get better and improve on my game. Denmark is a small country but I am very proud that we can compete with the bigger countries. It's a dream come true, ever since I was a little boy I dreamed of a World Championships final."
Chen, 28, said he was under too much pressure. "I got the first points, then lost a lot of the next, and that really affected my game. In the second I managed to go ahead and that put a lot of pressure on me, but Victor played very well.
"Congratulations to Victor to getting to the final, he played the perfect game," he added.
With the straight-game victory, coming after seven straight finals losses, Sindhu became the first Indian to achieve the feat.
Playing her third successive season-ending finale, Sindhu, who had lost in the summit clash to another Japanese, Akane Yamaguchi, to settle for a silver in the last edition, prevailed 21-19 21-17 in a match that lasted an hour and two minutes.
This was her career's 14th title but the year's first. Prior to this in 2018, she has won silver at the World Championships, Asian Games, Commonwealth Games, Thailand Open and India Open.
Dubbed a bridesmaid after falling short of gold on a number of occasions, Sindhu finally broke her jinx, screamed and sunk to her knees.
Saina Nehwal had reached the finals of 2011 World Super Series Finals, while Jwala Gutta and V Diju finished runners up at the 2009 edition.
Sindhu, an Olympic and World Championship silver medallist, was composed and held her nerves at the crucial moments to stay a step ahead of the Japanese through the match.
In the first game, Okuhara made a couple of errors and Sindhu took early lead.
She used some drop shots and looked good at the net to lead 7-3 but Okuhara narrowed down the deficit to 5-7. Sindhu dominated the next long rally and nosed ahead 11-6 at the mid-game break.
After the breather, Sindhu extended her lead to 14-6 before Okuhara reeled off four successive points to narrow the deficit.
Okuhara seemed to control the proceedings next as she erased the deficit to claw back at 16-16. In fact, the Japanese grabbed 10 of the 12 points after being down 6-14 down, to draw parity.
But Okuhara also smashed wide twice to hand Sindhu a 19-17 advantage. The Indian grabbed three game point advantage but Okuhara managed to save two before Sindhu sealed the opening game with a superb drop shot.
Sindhu engaged in long rallies with Okuhara and managed to stay 6-4 ahead at one stage of the second game. The Japanese stretched and controlled the rallies and waited for the Indian to hit out. It worked as she forced her way back at 7-7.
Sindhu, however, managed to always stay ahead and led 11-9 at the interval after Okuhara lost a video referral.
Okuhara tried to push the shuttle back of the court from the baseline and unleashed a body smash to make it 12-13. She kept snapping at her rival's heels to make it 16-17.
A return to the net gave Sindhu a 18-16 lead. A long rally ensued and it ended with Okuhara leaving it shot and Sindhu unleashing a smash to move to 19-16.
A lucky net chord took the Indian one step away from the title. Sindhu grabbed three match points and converted them immediately to seal the issue in her favour.
In a nerve-wrecking final, which tested the physical and mental strength of both the players, Sindhu lost 19-21 22-20 20-22 after battling hard for one hour and 49 minutes.
Their bodies falling apart as the match progressed but both Sindhu and Okuhara used every ounce of energy left with them to make it an epic contest.
After closing the second game by winning an incredible 73-shot rally, Sindhu saved one championship point in the decider but it was the Japanese who had the last laugh.
Nevertheless, Sindhu fought like a true champion and kept her promise that she would strive to change the colour of her medal, having won two bronze from past editions. Although she would have hoped for a gold, which no Indian has even won at the World Championship.
For India, it still was a historic edition since for the first time country's shuttler are returning with two medals.
Saina Nehwal had won a bronze yesterday after losing her semifinal.