Instructions
Equip a ground or air attack ability before the battle. You will need to finish Sephiroth off with a combination attack, so you will need an ability like Upper Slash or Aerial Sweep.
Avoid Sephiroth's attacks. When Sephiroth shifts into his final form, he will have about five and a half bars of health left. He will glow with a purple light and begin to dash across the battlefield quickly. He is virtually invincible, and you cannot attack him first. You have no choice but to dodge his attacks.
Heal frequently. When Sephiroth pauses to unleash a Supernova attack, use the opportunity to replenish your hit points or magic points with a Curaga spell and an Ether or with an Elixir. Dodge the attack once he unleashes it.
Attack Sephiroth after he makes a dash. The one opportune moment during which you can inflict damage on Sephiroth while in his final form is right after Sephiroth quickly crosses the battlefield and makes a slash attack. Dodge his attack and quickly attack him to catch him off guard.
Finish Sephiroth with a combo attack. When Sephiroth nears the end of his last health bar, dodge his attack and then strike him after his slash attack. Hit him three or more times in a row to activate a combo attack so that you can beat him.