The Dutchman reached his sixth championship final with a brutal 6-0 demolition over Dimitri Van den Bergh and will come up against home favourite Smith, who edged a pulsating match against Gabriel Clemens 6-2.
Van Gerwen, ranked number 3 in the world, had a shaky start and soon found himself 2-1 down in the opening set before storming back to win 3-2.
The three-time champion didn't let up as he put in a ruthless display of brilliance to outclass Van den Bergh and book his place in Tuesday's final, a re-run of the 2019 showpiece he won 7-3.
"It feels phenomenal to have played the game I played tonight," the 33-year-old told Sky Sports.
"I gave it everything and I played out of my skin. It cost so much energy but I am able to do it and that is the most important thing.
"With the crowd behind me again today, it feels phenomenal. Games can get tense but you need to focus and that is exactly what I did."
'Mighty Mike' hit an average of 108.28 to put a daunting marker down for Smith as he bids for a fourth world crown.
"(Michael Smith) is not going to stop me. No one is going to stop me. I feel comfortable, I feel good.
"I think the crowd deserves a final like this. Me against Michael Smith, I think it is good for darts," he added.
Fourth time lucky for Smith?
In the earlier semi-final, Smith won four sets on the spin against Clemens to book his place in the final with 'The German Giant' seeing his historic run as the first player from the country to reach the last four come to a disappointing end.
'Bully Boy' will now attempt to seek redemption for his 2019 defeat and win the biggest prize for the first time having lost three of the previous five championship finals.
For added motivation, the 32-year-old will become the world's top-ranked player if he lifts the trophy against his old adversary following his triumph at the Grand Slam of Darts last year.
"I told myself I had to step up, it is the semi-finals of the Worlds, I can't keep playing how I was and luckily enough I did," he told Sky Sports.
"I just kept telling myself as long as I owned my throw in my sets I was good.
"I hit that first 180 in the very first leg and it set me up. As soon as I hit that, I had found the first dart and knew it was good.
"This is my third World final in five years now and I have just got to keep going," he added.
Follow the World Championship final: Michael Smith v Michael van Gerwen on Tuesday
