The ninth seed beat Escude 6-1, 6-3, 6-2 in a one-sided semi-final to set up a left-handed contest for the men's title against the sixth seed, Petr Korda.
Rios, one of the sport's more insular characters, admitted he has been accused by rival players of "tanking" - or giving up - in the past. He acknowledged that he once was too lazy to fight when losing matches.
"Some days I didn't want to play. I would wake up and say `I don't want to play tennis, I don't want to fight today'," he said. "Sometimes I feel tired and some matches I didn't want to play. But I came to realise that tennis is a tough sport: you have to be professional 24 hours a day.
"At the beginning of playing on the tour, I lost easy matches. But two years ago I have tried to fight in all my matches. I discovered it is more mental and I have to stay more focused on all the points, all the matches.
"It is really exciting to win a Grand Slam. No Chilean has previously done it and I'll be the only one in my country to do it, if I win on Sunday."
Rios is the first Chilean to reach a Grand Slam final since Luis Ayala lost in the 1960 French Open. He has surged up the rankings in the past year and was the only player in 1997 to reach the fourth round or better of all four Grand Slam events.
Rios eliminated Korda, from the Czech Republic, from the first round of last year's Australian Open in straight sets and they have split their six meetings.
"It is totally different to play a final and to play a guy in the top 10," Rios said. "Last year was first round, he wasn't doing that good. I think this year is more exciting. He plays fast and he's tough and confident." Rios broke Escude's service eight times and when the Frenchman fell two sets behind he could not fight back as he had done three times previously in the tournament.
Martina Hingis teamed up with Mirjana Lucic to beat the top doubles seeds, Lindsay Davenport and Natasha Zvereva, in the women's doubles final. The unseeded Hingis and her 15-year-old partner from Croatia had to come back from 0-3 down in the third set to win 6-4, 2-6, 6-3.
The 17-year-old Swiss won last year with Zvereva and decided that retaining the title was sufficient preparation for today's singles final against Conchita Martinez of Spain.
"That's enough for today," she said. "I have played enough tennis these two weeks. Even if I played another half an hour I wouldn't learn anything."
l Steffi Graf has had to shelve her latest comeback after a recurrence of knee trouble. The former world No 1 had planned to return in next week's Pan Pacific Open in Tokyo after eight months out.
- Derrick Whyte, MelbourneReuse content