Pegula beat the 17th seed Keys in their only previous meeting last year and was considered as one of the U.S.'s brightest hopes after winning the Montreal title last month.
"I've had so many amazing moments in New York," said Keys, who is playing in her 12th U.S. Open main draw.
Keys broke her opponent's serve with a backhand winner in the second game of the first set and broke Pegula again on the fourth try in game six.
Pegula broke back immediately in the sixth game but Keys kept her cool, retaking the lead as she broke her opponent's serve in the seventh game.
Reporting by Amy Tennery in New York, editing by Pritha SarkarOur Standards: The Thomson Reuters Trust Principles.
Persons:
Madison Keys, Belgium's Yanina Wickmayer, Brendan Mcdermid, Jessica Pegula, Arthur Ashe, Keys, Pegula, I've, Marketa Vondrousova, Peyton Stearns, Amy Tennery, Pritha Sarkar
Organizations:
Madison, Belgium's Yanina Wickmayer REUTERS, U.S, Cincinnati, New, Montreal, Wimbledon, Thomson
Locations:
Flushing Meadows , New York, United States, New York, U.S