Goals from Adrian Lopez and Arda Turan, with a penalty from Diego Costa in between, gave Atletico a 3-1 aggregate victory after last week's goalless draw in Madrid and put them into the final of Europe's elite competition for the first time since 1974.
It was a result which gave particular satisfaction for the Spanish press, who seized the opportunity to put the boot into Jose Mourinho, the Chelsea manager who left Real Madrid last summer. "The Semi-final One" declared Marca, with glee, after the Portuguese came up short in the last four for the fourth season in succession. There certainly will be no shortage of material for the Madrid newspapers in the coming weeks, with the Champions League about to stage its first-ever one-city final.
"The game until a certain minute was very equal," Mourinho said. "The first half was more ours than them, but in the second half one minute changes everything. One minute, the Atletico keeper makes a very good save, the same minute it was a penalty, after that, 2-1 against Atletico is almost impossible.
"After that there was only one team. One team with morale high, knowing they had the result under control. Credit to Atletico, they are a fantastic football team."
Chelsea took the lead after 36 minutes when former Atletico favourite Fernando Torres scored with a deflected shot, but the goal inspired the Primera Division leaders, who will meet their neighbours in Lisbon on May 24.
"The truth is the team was brilliant," Costa said afterwards. "We have done everything possible to get to the final. Both Real Madrid and us are deserved finalists."
Chelsea midfielder Willian started the move that led to the opening goal and turned his marker wide on the right before Cesar Azpilicueta, playing in an unfamiliar midfield role, set up the chance for Torres who clipped the ball home via a deflection off Mario Suarez.
Atletico took advantage of poor defending for the equaliser a minute before half-time when the home team failed to clear a floated cross from Thiago to the unmarked Juanfran who stole in at the far post. He crossed for Adrian Lopez whose shot bounced down on its way into the net.
Mark Schwarzer, the veteran Chelsea goalkeeper, rolled back the years at the start of the second half with a stunning two-handed reflex save from Turan who took advantage of more poor defending to rifle in a blistering angled shot.
Atletico, who held the away goal advantage with the score at 1-1, refused to sit back and were rewarded after an hour when Samuel Eto'o, who had replaced Ashley Cole, fouled Costa to concede a penalty.
Costa blasted the ball past Schwarzer to make it 2-1 before Turan sealed a glorious victory with the third goal as Chelsea collapsed at the back.
David Luiz hit the post for Chelsea but they were totally outplayed in the second half and Atletico ran out deserved winners.
It will be their second appearance in the final after they were beaten - in the only European Cup final to be replayed - by Bayern Munich in 1974.
Real, the world's richest club by income with revenue almost five times that of Atletico, are bidding for a record-extending 10th continental crown in their 13th final and first since they last won the trophy in 2002. Atletico also remain on course for an unlikely double as they are top of the league with three games to play.
"Real Madrid, in my opinion, are the best team in Europe at the moment," said Filipe, the left-back. "The most difficult that we could play. There are still very important games left [in the league], though; Levante is the most important now."
As for Chelsea? "Next season will be better than this season," said Mourinho. "Our young players will be better, hopefully we will have a couple of players to improve our team and we will try to do better next season."