Top seed Nadal had talked this week of getting back to the kind of form he displayed before knee and abdominal injuries disrupted his season but he could nothing to counter the power of Cilic, who will meet Novak Djokovic on Sunday.
French Open champion Svetlana Kuznetsova, the highest surviving women's seed, beat fellow Russian Nadia Petrova 6-1, 6-3 to ease into her fourth China Open final, where she will meet Pole Agnieszka Radwanska, who won 6-4, 6-3 against France's Marion Bartoli.
Cilic, the eighth seeded wildcard in his first meeting with Nadal, led 5-0 after just 15 minutes of the first set and allowed the Spaniard just two break points in the match, both in the second set.
"Cilic is good, is young and has a very good serve but if you are losing 6-1 6-3 there are a lot of things you are doing wrong," said Australian Open champion Nadal.
"Mentally I probably wasn't there. The worst thing for me is when I had a little bit of a chance to come back into the match in the second set I didn't play well," he added.
RASPING FOREHAND
Even the vociferous support of the centre court crowd could not rouse Nadal and Cilic sealed victory with a rasping forehand on his fifth match point.
"I've played Djokovic three times and lost three times but this time I'm playing good," said the 21-year-old Cilic.
"If I can put in a performance like today I'm sure I have a shot," Cilic added.
Second seed Djokovic took his place in the final by beating Swede Robin Soderling 6-3, 6-3 in a match that was closer than the scoreline suggested.
The Serb, now assured of moving above injured Andy Murray to reclaim the world number three spot, outscored the sixth seed 6-4 in the ace count and kept his errors to a minimum.
Sixth seed Kuznetsova moved Petrova around the court to good effect and saved five of her compatriot's six break points in her 68-minute victory.
Radwanska was broken in the first game of both sets but quickly came back each time and preserved her unbeaten record against Bartoli, with the Frenchwoman returning long in the final stroke of the 77-minute match.
"If I play my best game, if I am doing well, I think I will be the favourite," said Kuznetsova, who has won just one of her three previous finals in Beijing in 2006.
"I think I'm going to win this time," she added.
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