Goalkeeper Maddie Hinch was once more England’s shootout hero, saving all four of New Zealand’s attempts.
Isabelle Petter and Hannah Martin both scored for the hosts to win 2-0 after the match finished 0-0. England seek a first Commonwealth title and will face Australia in the final.
Four-time champions Australia won their semi-final shootout against India 3-0 after the match finished 1-1 in normal time.
The final begins at 15:00 BST on Sunday.
Following England’s victory, Hinch said, “Those sorts of occasions are what keepers, and hopefully young goalkeepers, are inspired by.
“To do it on a platform like that, with that home crowd, really gives you that extra bit of belief.”
The 33-year-old has already won Olympic and European gold but said of the chance to claim a Commonwealth title: “I’m definitely towards the back end of my career now and this is something I’ve been desperately wanting in my career and been so close to a couple of times.”
Hinch the hero again
It was a frantic opening befitting a semi-final, with plenty of chances for both sides and Hinch’s sharp goalkeeping maintaining a clean sheet for England.
Things slowed for both teams in a stop-start second quarter, before England’s Sophie Hamilton spiced things up with a swift ball across goal.
However, none of England’s players could convert and the score remained 0-0 at half time.
New Zealand looked more dominant as the second half began and the excitement rose in an end-to-end final 10 minutes.
Neither side could find a way through, meaning each had five chances to score from the 23m line in a shootout.
With the crowd already in full voice, Hinch showed the athletic and aggressive goalkeeping that helped her win Olympic gold with Great Britain in 2016.
England’s Petter finally broke the deadlock and Martin’s shootout slowly rolled across the line before the hosts ran on to celebrate, jumping up and down in a gleeful huddle.
Earlier on Friday, Wales’ women finished in eighth place after losing 1-0 to South Africa in their seventh-place match.
Penalty Shootout – England Win
- NZ miss 0-0 – Ralph
- ENG miss 0-0 – Howard
- NZ miss 0-0 – Tynan
- ENG miss 0-0 – Owsley
- NZ miss 0-0 – Doar
- ENG score 1-0 – Petter
- NZ miss 1-0 – Shannon
- ENG score 2-0 – Martin
The first semi-final at the Commonwealth Games finished 0-0. A penalty shootout will decide who between England and New Zealand goes through to the gold medal match.
How they got here
England qualified for the final four after a perfect Pool stage record of four wins from four games.
Wins over Ghana, Canada, India and Wales secured top spot.
In Pool B New Zealand finished second, winning three of their matches, only suffering a tight defeat to Australia (1-0).
England are unchanged from the side that beat Wales 5-0 in their final Pool A match.
England: Hinch, Unsworth, Toman, Martin, Rayer, Petter, Ansley, Pearne-Webb, Crackles, Owsley, Peel.
Subs: Hunt, Walker, Howard, Hamilton, McCallin, Heesh, Balsdon.