Lofton scored 19 points, Smith made five free throws in the final 36 seconds and the Vols held off West Virginia 74-72 on Friday.
"This showed that we are a different team from last year," Smith said. "It showed that we can close out close games and that we are growing up and we aren't a young team no more."
Tennessee (5-0) certainly made coach Bruce Pearl sweat in advancing to a title game here on Saturday night against Texas (4-0). The Longhorns (No. 16 ESPN/USA Today, No. 15 AP) beat New Mexico State 102-87 in the other semifinal earlier at the new Prudential Center.
The Volunteers built a couple of seemingly comfortable second-half leads before seeing the Mountaineers (2-1) get back in the game for new coach Bob Huggins.
"It was close game," Lofton said. "Coach Huggins is known for his physical defense and we had trouble getting into our offense."
Wayne Chism added 17 points and Smith finished with 15 for Tennessee, which had to survive a game-tying 3-point attempt with 10 seconds to play to advance.
"I'm not into moral victories," Huggins said. "We had an opportunity to win and didn't."
The Volunteers never trailed after Smith hit consecutive 3-pointers in a 9-2 spurt early in the second half for a 48-43 lead, but West Virginia kept coming back and had at least three chances to tie it.
The last came with about 10 seconds to play when Ruoff was short with a 3-pointer with the Volunteers ahead 73-70.
Smith had hit two free throws with 36 seconds to play to give Tennessee a 71-67 lead and the Mountaineers seemed out of it when Butler had a shot go in and out of the basket.
Lofton was fouled after the play and he then missed two free throws, giving West Virginia life. Ruoff followed with a 3-pointer with 14.2 seconds to play to cut the margin to 71-70.
Smith was quickly fouled again and he swished both free throws.
Without any timeouts, West Virginia rushed the ball up the court and Ruoff failed to hit the rim.
Smith added a final free throw for a 74-70 lead. Josh Sowards backed in a shot at the buzzer for the final margin in the game that featured technical foul calls against Pearl and Huggins.
Pearl got called for his technical with 15:26 left in the game and the Vols leading 39-33. The Mountaineers scored the next eight points, taking a 41-39 lead on a layup by Nichols.
"It was nothing I said, just my mannerisms," Pearl said.
Smith hit two 3-pointers in 9-2 spurt that gave Tennessee the lead for good at 48-43, but the Mountaineers never went away despite falling behind by 61-52 with 6:57 to play on a 3-pointer by Lofton.
"We're not going to fall apart because we work so hard at doing the fundamental things of basketball," Huggins said. "We work hard at guarding and rebounding the ball. We still have a long, long way to go."
Butler got the Mountaineers going with a jumper and a 3-pointer to ignite an 8-0 run. He capped the run making the second of two free throws.
Another 3-pointer by Lofton in a six-point run pushed the lead to 67-60 before Butler hit a jumper and Wellington Smith nailed a 3-pointer to cut the lead to two points.
After Lofton added two free throws, Nichols made a layup with 1:13 to play to make it a two-point game again and Butler had a shot go in and out that would have tied the game at 69.
JaJuan Smith then started making his free throws.
"I've taken a lot of pride trying to make free throws," JaJuan Smith said. "It was an opportunity for me to step up and make big plays for my team, being a leader."