The Scot, who earlier this year won an Olympic gold medal before also claiming his first Major title at the US Open, was brushed aside 7-6 (7-5) 6-2 by an in-form Federer at London’s O2 Arena last night.
The legendary Swiss will now face world No1 Novak Djokovic in the final tonight.
But Murray remained upbeat, despite missing out. “It’s been an incredibly positive year. I would’ve loved to have finished the year on a win, of course, but that didn’t happen. But for me it’s been the best year of my career by a mile,” he said.
“Once [Federer] gets ahead, he’s incredibly hard to stop. He tends to play better and better when he gets up. I feel like I gave him that advantage at the beginning of the second set.”
Murray began well, forcing an early break in the first set to go 3-1 up, although Federer showed typical determination to level the scores at 4-4.
The pair ran neck and neck into a tie break, with Federer taking it 7-5 due to an unforced error by Murray on the 12th point.
While thousands of adoring fans had driven Murray to a close opening set, he was unable to contain a rampant Federer in the second, Federer’s comfortable 6-2 win lasting little over half an hour.
“It was a special match,” Federer said. “You can’t tire of nights like this. That is why I keep practising in front of no people, it inspires you to keep working hard.”
Earlier in the day Djokovic defeated Juan Martin Del Potro in three sets, characteristically recovering from being a set down to win 4-6 6-3 6-2.
The Serb is guaranteed to end the season ranked top in the world.