The 20-year-old from Denmark is the 10th woman to end the season on top and the youngest since Martina Hingis in 1997. She replaced the injured Serena Williams at the top earlier this month and has won more titles (six) and more matches (61) than any other player in 2010.
"It's really great, that is something I've dreamed about since I was a little girl," she said of the No. 1 ranking. "I'm really happy, really proud about what I've achieved this year."
Wozniacki qualified for the semifinals in second place behind Vera Zvonareva in the Maroon Group. Kim Clijsters and Samantha Stosur have qualified from the White Group but will meet each other on Friday to decide who finishes first and plays Wozniacki in the last four.
Wozniacki came into the tournament needing two wins from the group stage to stave off a challenge from Zvonareva for her No. 1 ranking, but she followed Wednesday's defeat by Stosur with more erratic play in the opening set of her match against the French Open champion.
Schiavone closed out the set with the help of three aces in the final game, but Wozniacki, with the help of some on-court coaching from her father, began to dictate play from the second set onwards.
"Francesca was playing really, really good in the first set and I didn't have too many chances to break her," Wozniacki said. "I just hung in there and kept my focus and tried to get a little more aggressive and not let her dictate the game and that helped me through."
Clijsters, who beat Jelena Jankovic in her first match in six weeks in her opener, began strongly against Azarenka, but the Belarusian fought back.
Azarenka allowed a 5-3 lead to slip in the second set before winning the next two games to force a decider, but she wilted in the heat as the fourth-ranked Clijsters ran off the first 12 of 14 points on her way to closing out an easy third set.
"It was a good match and obviously disappointing to lose that second set. It was close," Clijsters said. "She dropped her level a little bit in third set and everything she was doing well in second set she kind of lost that a little. I was happy with that. I just tried to be aggressive, focused and not let her get back in the match."
Dementieva, meanwhile, rallied to beat Stosur 4-6, 6-4, 7-6 (4) for her first group-stage win, but the Australian made sure of her place in the semifinals by winning the first set.
Dementieva, easily beaten by Wozniacki in her first match, made sure of the first three-set match of the tournament by claiming the second set and then held her nerve in a tense decider.
"I was trying to improve my game coming in this match," Dementieva said. "Playing someone who had a great win last night, I was trying to fight for every point and it feels great to win 7-6 in the third."