The Manchester City forward hit the headlines for all the right reasons, opening the scoring with a powerful header before smashing home an emphatic second to clinch a date with Spain at the Olympic Stadium on Sunday.
It was a deserved victory for Italy, who could have added further goals in the second half had they taken one of the numerous chances afforded to them by Germany's rushes forward to find a way back into the match.
Mesut Ozil ensured a nervy finish to the encounter with a penalty in second-half stoppage time, but there was to be no miracle for Germany, who bowed out at the semi-final stage for the second major tournament in a row.
It was Germany who threatened first only six minutes in, after Mats Hummels' scrambled shot was blocked on the line by Andrea Pirlo, allowing Gianluigi Buffon to smother.
Italy's skipper nearly forced an own goal moments later after inadvertently diverting a Jerome Boateng cross into Andrea Barzagli, but the deflection rolled just wide of the post.
Riccardo Montolivo blasted into the arms of Manuel Neuer from the edge of the box, but the Germany keeper was forced to work much harder by Antonio Cassano, whose curler towards the bottom corner was tipped away.
Italy started to ask questions of the suspect German defence. Then, with 20 minutes gone, they carved them apart.
Chiellini fed Cassano on the overlap down the left, and the Milan forward delivered a superb cross into the heart of the area, where Balotelli rose above Holger Badstuber to head Italy into the lead.
Italy were buoyed by the goal, with Germany still unable to shake off the erratic edge to their play. Montolivo's hesitation allowed Badstuber to strip him of possession deep inside the area, but the new Milan signing would make a far more decisive contribution with 36 minutes gone.
His searching ball over the top caught the German back line out completely and released Balotelli, who stormed towards goal and smashed an unstoppable finish high into the back of the net.
The Manchester City man was booked for ripping his shirt off in a passionate celebration, but there were no such signs of desire from Germany.
Germany's Phillip Lahm should have done a lot better after the restart, blasting over from wide out.
Marco Reus was next to try his luck with a powerful free-kick from 20 yards out, but Buffon was equal to it and managed to punch over the crossbar.
Then it was Italy's turn.
A sweeping break just past the hour mark saw Alessandro Diamanti slip in Claudio Marchisio behind Badstuber, but his finish was driven the wrong side of the post.
The Juventus midfielder spurned an even greater chance with a quarter of an hour to play, when Badstuber's slip allowed him with a clear sight on goal, but he disappointingly dragged his shot wide.
Substitute Antonio Di Natale wasted another chance on 82 minutes after being put one-on-one with Neuer, but with all the time in the world to pick his spot, he instead found the side netting.
Germany were handed a late lifeline after Balzaretti's handball was spotted in the box, giving Ozil the chance to bury from the spot.