Pegula will face Linda Noskova in the final after the Czech eighth seed ended the run of Filipino Alexandra Eala with a 6-2, 6-4 victory.
Sabalenka, who exited the French Open in the quarter-finals, struggled to find her rhythm after a slow start, and Pegula took the opening set following an early break.
After a rain delay, Sabalenka took the second-set tiebreak before Pegula reasserted control to race through the decider.
"I told myself after I ended up losing that second-set tiebreak that before the rain delay, I had a lot of momentum. She just hit a double fault. I felt like I kind of had it there, and I was serving well," said 2024 Berlin champion Pegula.
"I was in a good rhythm, and then having to get off court and losing that pretty quickly - only winning one point in the tiebreak was a little tough.
"But she's No. 1 in the world for a reason, and I feel like I gave her too many easy shots and she went for it, and that's just what happens."
All four of the Belarusian's Grand Slam titles - her most recent at the 2025 US Open - have come on hard courts, and she is still chasing a first Wimbledon crown after three semi-final runs.
She lost this year's Australian Open final to Elena Rybakina, a year after finishing runner-up to American Madison Keys.
Noskova made a dominant start, securing an early break to swiftly win the first set. Eala ran out of ideas in the second as Noskova secured the win.