Home hope and sixth seed Paolini became the third Italian woman to reach the Foro Italico final, and the first since her doubles partner Sara Errani was thumped by Serena Williams in 2014.
The 29-year-old will face one of Coco Gauff and China's Zheng Qinwen, who beat world number one Aryna Sabalenka on Wednesday night, with that contest the last match of the day on centre court.
"It's a dream of mine to get to the final here. It was a difficult start, thank goodness you were all here to give me a boost," Paolini said on court.
"I didn't have a great feeling at the beginning of the match, but I'm really happy about how I managed to turn it around."
Paolini was the favourite to get past unseeded Stearns, but early on her American opponent showed why she got to her first 1000 series semi-final by knocking out a succession of big names, including Naomi Osaka and fifth seed Madison Keys.
Paolini looked way off the pace when she lost the first three games of the match in surprisingly timid fashion, serving weakly and mishitting a host of simple shots.
But she slowly began to force herself back into the contest, putting pressure on Stearns to find shots with her serving and finding both more power and accuracy on her forehand.
Stearns' frustration was clear to see after being broken to allow Paolini to serve for the set, lashing her racket into her bag before giving herself a telling off in her seat.
And a break of serve in the third game of the second set deflated Stearns, whose fate was sealed two games later when Paolini took the third of three break points, roaring her joy to her delighted supporters in the centre court stands before comfortably seeing out the match.
Paolini could yet win both the singles and women's doubles tournaments, with her and Errani taking on Mirra Andreeva and Diana Shnaider in the semi-finals on Friday.