Tebogo, last year's world championship bronze medallist, overtook the American 100 metres champion on the bend and cruised the rest of the way unchallenged to finish in 19.96 seconds. The 27-year-old Lyles had to work hard to finish second in 20.08.
Americans Kenny Bednarek, Olympic silver medallist in Tokyo, and Erriyon Knighton each won their semi-finals, Bednarek clocking 20.00 and the 20-year-old Knighton crossing in 20.09.
Rounding out the field for Thursday's final are Alexander Ogando of the Dominican Republic, Joseph Fahnbulleh of Liberia, and Zimbabwe's Tapiwanashe Makarawu and Makanakaishe Charamba.
Lyles, the three-times reigning world champion over what has always been his stronger event, has not lost over the distance since he had to settle for bronze at the 2020 Tokyo Olympics.
His run on Wednesday, however, was reminiscent of his sluggish 100m semi-final after which he reached out to his therapist for guidance. He came out two hours later and electrified the crowd by winning the most competitive men's 100m in Olympic history.
Lyles did not stop to speak to reporters, heading straight to see medical experts, a USA Track and Field spokesperson said.
He is looking to become the first American in four decades to win the Olympic sprint double and is aiming for potentially four golds in Paris, in the 100m, 200m, 4x100m relay, and - if he is selected in the squad - the 4x400m relay.
Canada's defending champion Andre de Grasse, the last man to beat Lyles in a competitive race over the distance, did not advance to the final.
"I reactivated a lingering issue in my hamstring," De Grasse said.
"It was going to be tough today. I knew I had to go out there and try to do my best and see what I can come up with.
"It's tough. It's been a tough 24, 48 hours. I've just got to try to keep the head, try to see how I can support my team in any way with the 4x100m relay."
