Sabalenka - who beat Pegula en route to US Open wins in 2024 and 2025 - punched her ticket to Saturday's final with a 7-5, 6-2 win on the Arthur Ashe Stadium court.
The Belarusian will surrender her world number one ranking to Elena Rybakina even if she earns the title
The 28-year-old Belarusian, bidding to join Chris Evert and Serena Williams as the only women to win three straight US Open titles, swatted aside Pegula with a dominant service game and a fearsome array of powerful groundstrokes.
Sabalenka will face the winner of Thursday's other semi-final between second seed Elena Rybakina or fourth seed Coco Gauff - who beat Sabalenka in the 2023 final.
On the evidence of her semi-final win, Sabalenka will head into the final bristling with confidence after producing her best performance of the tournament to snuff out Pegula's dream of a first ever Grand Slam title.
"I'm super happy I was able to play such tennis," said Sabalenka, who sent down seven aces and 29 winners. "I was so desperate to win. I wanted it so badly."
Both players gave away little in the first set, serving superbly to keep the match on serve until the 12th game, with Sabalenka leading 6-5.
Sabalenka's frustration at her inability to make any headway against Pegula's serve showed with shrugs and a bounced racquet, but she maintained her focus and was rewarded as Pegula, feeling the pressure to stay in the set as she served down 6-5, fell behind 0-40.
The American saved one set point but couldn't salvage the next as Sabalenka seized control of the point with a fierce service return and took the set when Pegula hit a forehand into the net.
Sabalenka kept rolling in the second set, attacking Pegula's suspect second serve and seizing a break for a 3-1 lead when she lasered a forehand into the corner.
She sealed the victory with another break, unleashing another thunderous forehand on match point.
It was more Grand Slam disappointment for Pegula, who fell to Sabalenka in the 2024 final -- her only major final to date -- and in the semi-finals last year.
Sabalenka, 28, has had a slow summer since winning back to back titles at Indian Wells and Miami in March, opening the door to Rybakina to end her reign atop the rankings that began in October 2024.
Rybakina was bracing for a hostile reception against Gauff, who has been a favorite of New York crowds since her US Open debut as a 15-year-old wild card in 2019.