Phelps, who counts three straight 200m medley golds among his astonishing 18 Olympic triumphs, cruised home to win the first semifinal in 1min 57.61sec.
He'll be seeded second in the final after Lochte won the second semi in 1:56.71.
That vaulted Lochte to second in the 2016 world rankings to Phelps's fourth – promising fireworks in a final with two Rio de Janeiro Olympic berths on the line.
"It's going to be good," Phelps predicted. "We're going to go out and probably step on the gas a little bit more. You'll have an exciting race."
Phelps said he had plenty in the tank for Friday, when he and Lochte will both also contest the 100m butterfly.
"It wasn't like a full, all-out swim," said Phelps, who looked relaxed and gave a wave when the crowd acknowledged his 31st birthday with a post-race cheer. "I wanted to win my heat."
Lochte, nursing a groin injury suffered in Sunday's 400m medley heats, said he could feel it on the breaststroke leg.
"It was easier than this morning," said Lochte, who is battling the pain with over the counter anti-inflammatory medication and massage. "The first part of the breaststroke felt good ... then it started hurting more and more."
Phelps said he doesn't think the injury will slow Lochte by much.
