Defending champion Sharapova was the heavy favourite to reach the final for a third consecutive year with the 29-year-old Kuznetsova having spent nearly six hours on court in the past two days to reach the last four.
However, it was the two-time Grand Slam champion who dictated from the off and didn't drop her serve once in the match.
Two breaks were enough to wrap up the first set in just over half an hour and despite an improvement from Sharapova in the second, another break in the fifth game of the second was all the Russian needed to reach her first premier mandatory final since 2009.
"I don't think it caught me by surprise. I'm playing in a semi-final of a tournament, you have to be ready for it. She was just the better player," said Sharapova.
The world number three had come into Madrid on a slump having lost in her first round in Miami and Stuttgart.
And Sharapova insisted despite defeat that it had been a decent start to her outdoor clay court season as she builds up for her defence of the French Open later this month.
"I'm happy to get obviously to this stage. Having lost a few matches beforehand, I did a good job of setting a good base for myself coming through some really tough matches in the last couple of rounds.
"Obviously we have another tournament ahead of us next week (in Rome) which will also be an important part of the preparation. I think every match for any player at this stage before a Grand Slam is important, so it will be for me as well."
Serena's winning streak ended by Kvitova
Wimbledon champion Petra Kvitova ended Serena Williams's unbeaten streak at 27 matches by inflicting the American's first defeat of the year 6-2, 6-3 to reach the Madrid Open final on Friday.
Williams had won all five of the previous meetings between the two, but looked out of sorts physically as Kvitova booked her place in the final in the Spanish capital for a second time in her career.
Kvitova will face Russia's Svetlana Kuznetsova in Saturday's final after she also pulled off a big upset in beating defending champion Maria Sharapova 6-2, 6-4.
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