"I thought I was very calm out there, even in hard moments", said Federer, who only returned to action last week in Stuttgart after a two-month break. Federer won the first meeting between the two on the clay courts of Rome in 2016, winning in straight sets, but the pair's second meeting at Halle a year ago at the semi-final stage was won by Zverev, which he won in three sets.
Zverev did finally set a break point on the Federer serve in the first game of the second set, but it passed by and Federer raced on to complete victory.
Federer's forehand victor at 4-4 secured the only break of the match and he served out to wrap up victory in one hour and 30 minutes.
"Zverev was a little nervous in the first game as Federer chose to receive first, and that's understandable, but then all of a sudden the Swiss was a break up". "He started serving great, which put me under pressure as I wasn't getting many looks", Federer told www.atpworldtour.com.
The Swiss top seed survived a break point in the opening game of the second set the only chance created by Zverev and then moved 4-2 ahead before taking his first championship point with a backhand volley.
Federer and Zverev, touted by many as a future superstar, are now 1-1 in head-to-head matches.
He will now play the victor of the other semi-final between Frenchman Richard Gasquet and local favourite Alexander Zverev.
"Everything has been geared toward that for the past 12 months and I'm happy with how I feel at the moment", Federer said before his match with Khachanov.
Italian Open champion Zverev had won all three of his previous finals this season, but was blown away by a vintage performance from the 18-time major champion in only 53 minutes.
Zverev had a little tougher day beating Richard Gasquet in three sets 4-6, 6-4, 6-3.
"I don't know if I'm ever going to win this tournament again", Federer said in English courtside.
His huge serve was on full display when he won the 's-Hertogenbosch title on grass last week and once again he used it to devastating effect against Querrey.
"I want to extend this part of my career as much as I can, being careful about details and trying not to make wrong choices that can break this ideal balance which allows me to play in a relaxed way, enjoying and winning at 35", Tennis World quoted Federer as saying.