Italian seventh seed Paolini, the runner-up at the French Open last month, triumphed 6-2, 6-1 over 19th seed Navarro in just 57 minutes.
The 28-year-old fired 19 winners to her opponent's six as she celebrated a first win over the American, having lost three times this year.
Paolini had not won a tour-level main draw match on grass before this year.
"It's unbelievable, it's amazing to get the win in this special court," said Paolini, the first Italian woman in the Open era to make the last four at Wimbledon.
"I'm so happy to be in the semi-final, I don't know what to say in this moment.
"It's a dream to be here in this position, to be in the semi-final. I was watching finals when I was a kid, on this court."
Paolini recovered from 1-2 down in the opening set and never looked back as Navarro was unable to repeat the form that accounted for Grand Slam title winners Naomi Osaka and Coco Gauff in the previous rounds.
Paoloni is very much a late bloomer.
Until this season, she had never made it past the second round of a Grand Slam in 16 appearances.
That changed with a fourth-round run at the Australian Open followed by a runner-up finish to Iga Swiatek at Roland Garros.
