Zverev booked his second successive final spot when he beat Frenchman Gasquet 4-6 6-4 6-3.
Against the 20-year-old Zverev, who lost last year's final to Florian Mayer, Federer raced to a 4-0 lead before wrapping up the first set in 22 minutes.
It was the 92nd career title for the Swiss.
Federer and Khachanov traded breaks in the first two games but the Swiss made amends by grabbing a second one to restore his advantage, clinching the first set on his second set point.
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As the last tournament before Wimbledon ends, two players are left standing in Halle. "And then having good footwork, to see the short ball, the floater, where I can come in and knock it off with a volley".
140 Number of finals Roger Federer has entered, including today's Halle Open. "Those are always signs for me that things are slowly starting to fall into place nicely", Federer said. After winning the Australian Open earlier this year, he has continued to amaze the tennis world with his play. The 35-year-old now boasts an astonishing 92 ATP World Tour titles.
Federer will head into Wimbledon, which starts on July 3, as favourite to win an outright record eighth title and surpass the mark of seven he now shares with Pete Sampras.
"Everything has been geared toward that for the past 12 months and I'm happy with how I feel at the moment", Federer said. At 35, the Swiss player became the oldest victor of the grass-court tournament. "It's warm, it's hot, I'm a little bit exhausted".
Rome Masters champion Zverev had won all three of his previous finals this season, but was blown away by a vintage performance from 18-time major champion Federer in only 53 minutes on Sunday.
He converted his first match point to reach an 11th Halle final.