Sania's defeat meant that the Indian has now lost all three encounters against her Italian friend.
It was for the third time in the season that Sania had made it to the singles semi-final of an WTA event.
The Indian earned 130 ranking points and US $10,200 as prize money for her brilliant effort through the week in the US $220,000 hard court event.
Sania could not play the way she did against Peer and Bartoli, who had retired mid-way due to a shoulder injury, and lost her semi-final within an hour.
Sania saved a breakpoint in the first set but the Italian still broke her twice to race away with the lead.
The second set was again a lop-sided affair with Schiavone breaking Sania twice as she quickly wrapped up the one-sided match.