Western entered the game down 3-0 from the semi-final first leg and when City captain Aziz Behich scored in the 20th minute in front of 7691 fans at AAMI Park, it sealed progression and teed up a blockbuster decider.
Noah Botic scored in the 66th minute to give United faint hope before City saw out the game.
Earlier on Saturday, the Victory claimed a stunning 2-0 away win over Auckland FC to beat the premiers 2-1 on aggregate.
Incredibly, what should be a sellout grand final will be the only major men's sporting event in town next Saturday night, with no AFL games in Melbourne.
While City will chase their second championship in five years, and Victory will hunt for their first since 2017-18, United are at the crossroads after a week overshadowed by their player payments scandal.
The players' union on Tuesday issued United with breach notices over unpaid wages and superannuation for both men's and women's clubs.
It's understood outstanding salaries have been paid but some superannuation has not.
Coach John Aloisi is off-contract and will surely consider his options, while star striker Botic appears destined to try his luck overseas.
City scored after Tilio burst forward and worked the ball to Yonatan Cohen, who forced a terrific dive from Matt Sutton.
Unfortunately for the United goalkeeper, Behich had made a good run to the back post and was on hand to tap home.
Western were inches away from scoring in the 42nd minute.
Riku Danzaki smacked a fierce strike off the post, then Beach brilliantly parried Botic's follow-up before claiming Michael Ruhs' subsequent header.
City peppered United's goal without reward.
Then, Botic won the ball off Steven Ugarkovic and it spilled to Hiroshi Ibusuki.
He found Matt Grimaldi, who squared it for Botic to tap home.
But it proved too little too late.
United screamed for a penalty in the 86th minute, believing Mathew Leckie had fouled James Donachie, but their pleas fell on deaf ears.
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