Injury has been a problem all tournament for Djokovic and he vomited during his previous matches after struggling with the heat and humidity.
The issues flared up again in Saturday’s semi-final with the 38-year-old receiving medical treatment on several occasions.
At the start of the seventh game, the former world number one had to take an extended medical break, lying on his stomach shirtless as a physio attended to his back.
He received treatment again at the break but battled through into the second set.
Despite visibly struggling, the Serb provided the Shanghai crowd with hopes of a comeback when he moved into a 4-3 lead before Vacherot reeled off three straight games to reach the final.
“I want to congratulate Valentin for reaching his first Masters final,” Djokovic said.
“Going from qualifications, it’s an amazing story. I told him at the net that he’s had an amazing tournament, but more so his attitude is very good and his game was amazing as well.
“So it’s all about him. I wish him all the best in the finals and the better player won today.”
Vacherot, who ensured he would rise into the top 100 for the first time by defeating Holger Rune in the quarter-finals, has now climbed 146 spots to world number 58 in the live rankings as a result of his Shanghai run.