United's victory over the European champions in front of a US record crowd of 109,318 fans at the Michigan Stadium on Saturday night confirmed them as Group A winners.
Ashley Young scored after 21 minutes after a free-flowing United move, with Gareth Bale responding from the penalty spot for Real six minutes later after being pulled down by Michael Keane in the box.
However, Young scored again on 37 minutes when his cross to Wayne Rooney drifted in and substitute Javier Hernandez wrapped up the win in the 80th minute when he converted a delivery from Shinji Kagawa.
United will now take on Liverpool in the final at Florida's Sun Life Stadium on Monday. There, Red Devils boss Louis van Gaal will get his first taste of the bitter rivalry between the two clubs. Brendan Rodgers' Reds qualified for the final after Manchester City lost 5-4 on penalties to Olympiacos following a 2-2 draw in Minneapolis.
Real Madrid's starting XI did not include Cristiano Ronaldo, or new signings Toni Kroos and James Rodriguez, but there were still plenty of stars on show in white.
The likes of Bale, Luka Modric and Xabi Alonso were second best in the opening half though as United dominated from the off.
Darren Fletcher in particular impressed early on. The Scot dictated play from deep, spraying passes across the vast surface in Ann Arbor.
United's captain for the night flashed a shot wide from 20 yards after 13 minutes and soon after he played a big part in the brilliant first goal.
The midfielder played the ball into Rooney, who returned it with a deft backheel. Fletcher then squared to Danny Welbeck, who teed up Young and he drilled the ball past Iker Casillas at his near post.
The final move, and the 20-plus passes that preceded it, made the goal very pleasing on the eye.
It took Carlo Ancelotti's team just six minutes to equalise though. Keane, making his first start of the tour, clambered all over Bale's back and the Welshman went to ground to earn a penalty. The former Tottenham winger converted the spot-kick to David de Gea's left.
Bale tested De Gea with an overhead kick, but United remained on top and they deservedly regained the lead nine minutes from half-time.
Young cut in from the left and floated a ball to the back post. Rooney missed as he jumped for the header, but his body movement was enough to wrong-foot Casillas and the ball sailed in at the far post.
Welbeck suffered an injury and came off for Wilfried Zaha just before the break. Van Gaal made three more substitutions at half-time, and another three on the hour.
With Rooney, Ander Herrera and Juan Mata off the pitch, United were nowhere near as strong.
Bale struck a post with a dipping free-kick. Real fans called for Ronaldo's introduction, yelling his name as he warmed up on the touchline.
Then, with 17 minutes left, the decibel levels rocketed inside the Michigan Stadium as Ronaldo replaced Alvaro Arbeloa.
The Portugal star wowed the crowds with a couple of neat step-overs, but he could not swing the match in Real's favour.
Hernandez put the result beyond any doubt when he nodded in Kagawa's pin-point pass from close range in the 80th minute.