After the hosts were sent in, Smith (65 runs off 43 balls) top-scored for the fifth time in as many innings to power the Sixers (8-198) to their highest total when batting first in a final.
The red-hot opener hurt his hand dropping Beau Webster in the cordon during the Hurricanes' innings but finished Friday night's game.
Chasing 199, Hobart lost both openers inside the powerplay but fought back through a 48-run stand between Webster (24) and Ben McDermott (40) for the third wicket.
The reigning champions never recovered from Webster holing out just before drinks, with Matthew Wade (0) and Nikhil Chaudhary (4) falling in consecutive Joel Davies (2-17) deliveries during a collapse of 4-14.
After contributing a handy 27 runs at No.5, allrounder Davies had a brilliant night in the field, diving low for a one-handed catch off his own bowling to dismiss veteran Wade.
The 31,127-strong Sydney crowd rejoiced as the 'Canes were all out for 141 in the 18th over.
It means the Sixers will travel to Perth for the decider, having lost to the Scorchers in the qualifying final on Tuesday.
Sunday marks the sixth time in 15 BBL seasons that the two heavyweights have faced off for the title.
Earlier, Smith shrugged off the loss of opening partner Babar Azam, who abruptly left for Pakistan national team duties on Thursday, and brought up a third half-century this BBL summer.
He kick-started the Sixers' innings with consecutive fours off Riley Meredith (3-52) in the second over.
The lone six of Smith's innings flew into the Brewongle Stand off Will Prestwidge, though not quite as high as the shot that landed on that same roof in Smith's last game at the SCG.
Smith mined the area behind the stumps, particularly past third man, and brought up his third half-century of the tournament with a cut shot that bounced once for four past backward point.
Billy Stanlake (2-46) was key early, dismissing new opener Daniel Hughes (13) and No.3 Josh Philippe (15) before they could forge meaty partnerships with Smith.
But injured Hurricanes captain Nathan Ellis (hamstring) watched on as his teammates came up short of answers bowling to Smith.
Rishad Hossain (2-33) finally had Smith's number during the power surge, as the right-hander mistimed his reverse sweep and was bowled.
In his 100th BBL game, Babar's replacement Hughes flicked to a diving Tim Ward but his modest total was still bigger than seven of his predecessor's 12 this summer.
For his part, Test superstar Mitch Starc (2-27) kickstarted the bloodshed for the Sixers as out-of-sorts Mitch Owen (13) skied him in the second over of a doomed Hurricanes chase.
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