Murray was pushed hard by Cilic but eventually subdued the Croatian in a tense two-hour semi-final and will face Canadian third seed Milos Raonic or Australia's Bernard Tomic for the trophy on Sunday.
The 29-year-old Scot's primary aim is to hone his grass-court game with Wimbledon starting in just over a week, but he would also relish passing John McEnroe, Andy Roddick, Lleyton Hewitt, Roy Emerson and Boris Becker as the sole owner of the most Queen's crowns.
Reaching his fifth final of the year will be hugely encouraging for Murray in the week he reunited with coach Ivan Lendl, two years after they originally parted ways.
The two-time Grand Slam champion looks to have got his painful French Open final loss to Novak Djokovic out of his system as he prepares for his latest attempt to emulate his historic 2013 Wimbledon triumph.
Also Read
"In the third set the intensity got raised and I played some good shots at the end. Hopefully I can serve like that again in the final. It's so important on this surface."
After playing British opponents in the previous two rounds, Murray had been looking forward to enjoying the complete backing of the crowd once again and he didn't take long to get them cheering.
He landed the first blow with a powerful crosscourt forehand that left Cilic reeling and secured a break in the third game.
Murray had won 10 of his previous 12 meetings with Cilic, including a tight three-setter in the 2013 Queen's final that ended the 2012 champion's bid to retain the title.
And, playing with far more urgency and swagger than in his last outing against Kyle Edmund, Murray was on course to extend his dominance over the world number 13 as he broke again to clinch the first set in ruthless fashion.
Cilic, hitting with more thrust and accuracy, took advantage with a break in the seventh game and there was more frustration for Murray when the fifth seed saved three break points at 4-3 and then closed out the set.
After dropping the second set against Edmund on Friday, Murray had responded with a blistering surge to the finish line and he repeated the trick against Cilic -- showing his tremendous reserves of spirit and stamina to secure the crucial break in the second game of a gripping final set.