After looking shaky late in the home-and-away season, the Magpies recaptured their best from early in the year to pip the Demons 9.6 (60) to 7.11 (53) in front of 92,636 fans in Thursday night's qualifying final.
Collingwood led by 25 points at three-quarter-time but had to survive a late Melbourne surge as the Demons dominated the final term without being able to get in front.
Tom McDonald and Bayley Fritsch both sprayed gettable set shots in the last quarter, as the Demons couldn't capitalise on Max Gawn and Christian Petracca's utter dominance in the midfield.
With captain Darcy Moore and fellow stopper Nathan Murphy returning from injuries, Collingwood's defensive set-up clicked into gear, with Melbourne winning the inside-50 count 69-37 but wasting so many opportunities.
"We're really proud," Magpies coach Craig McRae said.
"These opportunities don't come around too often, to be able to win your first final and then a guaranteed home prelim, so we want to live in this space.
"I just had to temper my confidence going into the game, to be honest. I just felt like we were really building for this game."
Collingwood could be battling Port Adelaide or Brisbane in a fortnight for a spot in the grand final, but enforcer Brayden Maynard faces a nervous wait to see if he will play in that preliminary final.
Melbourne's Angus Brayshaw was knocked out cold during a chaotic first quarter after Maynard's attempted smother on the Demons midfielder went wrong.
Maynard jumped forward in an attempted smother and collected Brayshaw high with his shoulder as tensions boiled over between the two teams just 10 minutes in.
The on-field umpire could be heard on the broadcast saying Maynard was reported for the high contact.
Brayshaw left the MCG on a stretcher and with his neck in a brace, meaning he will be in the 12-day concussion protocols and ruled out of next week's semi-final against Carlton or Sydney.
Melbourne might also be without young key forward Jacob van Rooyen next week after he collected Daniel McStay high later in the first quarter.
McStay underwent a concussion test but returned to the ground in the second term, catching fire after a slow start to boot two goals in an important third quarter.
The Magpies booted the first two goals through small forward Bobby Hill, sending the pro-Collingwood crowd into raptures.
Hill finished with three goals in an electric display from the former GWS player, who like McStay, arrived at Collingwood during last year's trade period.
It was Melbourne's third-straight loss in a final since their 2021 premiership following last year's straight-sets exit from the post-season.
Simon Goodwin had a 5-1 record as coach in finals after the Demons' triumph over the Western Bulldogs two years ago.
Melbourne's forward line lacked potency, with veteran McDonald having no impact until the final quarter as the replacement for Jake Melksham, who ruptured his ACL in the Demons' final-round game against Sydney.
"We dominated the game post-quarter time, for a big part of it and we were wearing them down, but our start was poor," Goodwin said.
"They played like winners for the last three quarters and we didn't get the result so we've got to come back and do it again."
12°C