They never trailed, building as much as a 20-point lead and out-rebounding Australia 17-9 in the first half alone.
The 'Dream Team' shaded their semi 85-83, while the French easily triumphed over Games host Australia 76-52 to move into the gold medal tip-off.
The defending champions, America have not lost in Olympic competition since the semi-finals of the 1988 Seoul Games.
They had an average margin of victory of 43.8 points in Barcelona, and 32.3 points in Atlanta. But for the second time in a week, the Lithuanians battled them down to the wire.
They lost by nine points in the preliminary round, and could have won the semi-final if guard Sarunas Jasikevicius had not missed an open three-point shot at the buzzer.
Historic
Lithuanian coach Jonas Kazlauskas said: "In the situation we had at the end of the game, we had an historic chance to win. But as you saw, we lost that chance."
The US got off to a quick start, taking a 12 point halftime lead. But Lithuania stormed back in the second period, led by Jasikevicius, who outplayed two of the NBA's best defenders, Jason Kidd and Gary Payton.
Trailing by one point with 10.8 seconds left, Lithuania fouled Kidd who hit only one of two foul shots to give them one last chance. But Jasikevicius's open three-pointer at the death fell way short.
"Lithuania were so good they had an opportunity to win it right at the end," admitted US coach Rudy Tomjanovich.
Better team
In the other semi-final, France, who have won only one Olympic basketball medal, a silver in 1948, looked the better team.
They never trailed, building as much as a 20-point lead and
out-rebounding Australia 17-9 in the first half alone.
Laurent Sciarra played the game of his career, knocking down 16 points and dishing out seven assists.
Centre Frederic Weiss, a draft pick of the New York Knicks, outplayed current Knicks centre Luc Longley at both ends of the court.
By the middle of the second half, the crowd began deriding the home team after a series of turnovers that ended any hopes of a comeback.
Australian forward Mark Bradtke."We didn't come out with as much passion as they did. They shot the ball well and defended well."
The French were forced to play without starting power forward Yann Bonato who ruptured his Achilles tendon in the quarter-finals.
But forward Stephane Risacher stepped up his game, especially in defence, shutting down the tournament's leading scorer Andrew Gaze, who managed only 10 points, well below his 21.2 average.
Gaze, a five-time Olympian probably playing in his last Games, did manage one statistical milestone, competing in his 39th game to pass Brazil's Oscar Schmidt as the all-time leader in Olympic play.