Shelton booked his place in an ATP Tour final for only the second time after battling past Argentina's Tomas Etcheverry 6-7(4), 6-4, 6-4.
Tiafoe meanwhile found the going slightly easier, booking his meeting with Shelton after a straight sets win over Italy's Luciano Darderi.
It means Shelton and Tiafoe will meet in Sunday's final for only the second time. Shelton defeated Tiafoe in four sets at their previous meeting in the quarter-finals of last year's U.S. Open.
Shelton didn't drop a serve in the first set but stumbled in the tie-breaker to give Etcheverry the early advantage.
However the American took advantage of the slower surface to plot a path past the South American in the final two sets.
"You have a lot of time out here, playing on clay," Shelton said. "The game just moves a little bit slower, you have more time to process.
"I tried to use that to my advantage today."
Tiafoe meanwhile is the first defending champion to reach the Houston final since Steve Johnson in 2018.
"Great performance from me today," said Tiafoe, who is relishing his second meeting with Shelton.
"He's got one of the best serves on the Tour," Tiafoe said.
"He's a great player. It's going to be a tough match and I'm ready for a good battle."
