German Ferreyra gave Aurelio Vidmar's City the lead in the 16th minute before Yonatan Cohen added a wonderful curling second in the 54th at AAMI Park.
A week on from his hat-trick against Adelaide, star United striker Noah Botic started on the bench after suffering a quad injury in the elimination final.
Botic came on in the 72nd minute, mere seconds before Mathew Leckie scored to wrap the game up.
City's three-goal buffer leaves John Aloisi's United with a mountain to climb in next Saturday's second leg at AAMI Park.
The winner on aggregate will face either premiers Auckland FC or Melbourne Victory, who play their first leg at the venue on Saturday night.
The game was played in front of a sparse crowd at AAMI Park, not Ironbark Fields as United have not been cleared to host Melbourne derbies at their smaller Tarneit base.
Hiroshi Ibusuki replaced Botic while City were without Nathaniel Atkinson (calf), with Callum Talbot playing right-back.
Ibusuki shot tamely at City goalkeeper Patrick Beach in the fifth minute.
City piled pressure on Western and broke through when Marco Tilio curled in a tantalising corner and Ferreyra rose highest to head home off United goalkeeper Matt Sutton.
In the 23rd minute, United's Matt Grimaldi turned a good cross from Riku Danzaki over the bar.
Tilio could have made it 2-0 in the 36th minute but blazed over the bar.
City doubled their lead when Alessandro Lopane worked the ball out to Yonatan Cohen on the right and the left-footed winger curled a wonderful first-time strike into the top corner.
Tilio dragged a shot wide in the 64th minute, then Aloisi summoned Botic and Ramy Najjarine off the bench in the 72nd minute.
Less than a minute later, City had their third.
Tilio launched a cross towards Cohen and the ball ricocheted fortuitously off his hip into the path of Leckie, who steamed in to rifled home his first ALM goal since December 2023.
It was just the 13th appearance of the season for Leckie, who has battled with calf and hamstring injuries.
City's Kai Trewin brilliantly cleared the ball to stop Oliver Lavale scoring in the 74th, while Ben Garuccio dragged a long-range shot wide in the 79th.
Beach denied Angus Thurgate in the 90th minute to seal the three-goal buffer.
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