The pair chased after the teen suspect, who tried to escape over a wall.
Finn caught up with the youth, took hold of his leg and brought him to the floor, but then he pulled out a 12-inch knife and stabbed the dog through the chest, before swinging the knife again and bringing it down on Finn's head.
Seven-year-old Finn, from the Bedfordshire, Cambridgeshire and Hertfordshire dog unit, needed four hours of life-saving surgery. The knife had narrowly missed his heart.
Giving evidence against the attacker in court, PC Wardell broke down in tears as he described the youth pulling the "biggest knife he had ever seen" out of the chest of his beloved dog.
He said: "I knew we were in mortal danger, I thought, 'he's just tried to kill my police dog and the next thing is me'.
"I thought 'we've got to do something about this now or we're not going home'.
"At that point I feared for my life and for Finn's life, I was expecting Finn to die in front of me.
"Fearing my dog would be dead before I got to the van, I scooped him up and ran to my van."
During his rehabilitation Finn would sit by the door and wait for Dave, who was back on duty, to come home.
And Finn himself made an amazing recovery and was back patrolling the streets at Christmas.
His 16-year-old attacker was convicted of actual bodily harm against PC Wardell, who had suffered a wound to his hand in the struggle, but only the criminal damage of Finn in May this year, and was jailed for four months.
The discrepancy between the way injured humans and service animals are treated by the law inspired a campaign called Finn For Change, asking the government to rethink sentencing guidelines.
A petition prompted a debate in Parliament and the law is currently under review.
Finn retired in March this year, but stayed with PC Wardell and his family, which includes three children, several dogs, a cat and a parrot.
PC Wardell, who has had Finn since he was a nine-month-old puppy, said: "Working with Finn has been an incredible and, more recently, emotional journey.
"Finn genuinely loved to work as a police dog and it has been an absolute pleasure to work with him. His desire to perform his duty to the best of his ability is second to none.
"He's now making the transition from Police Dog Finn to pet dog Finn.
"It's very rare that the house is empty, though, and on my days off I'll keep his training going, to keep him fit.”
Finn is also enjoying new experiences, including a family holiday to the seaside in Norfolk.
PC Wardell said: "Police dogs aren't allowed out of their home county unless on official duty, and as Hertfordshire is landlocked, it will be a new experience.
"He saw the sea once - for about 20 minutes - when we were on a course in Wales.
Retired police dogs do not always stay with their handlers, but he said there was "never a chance" he would let Finn go.
He said: "He means the world to me. He's like a son.
"I think I've leant on him for emotional and physical support especially after what happened, because he did save my life.
"I'll miss him immensely at work, but now we'll get to go away together and have lots of new adventures."