City beat United 2-0 thanks to John Stones and Fernandinho's second-half goals which set them up for a place in the final against Tottenham Hotspur. Pep Guardiola's side have reached their fourth consecutive league cup final and could win their fourth Carabao Cup in a row.
As for United and Ole Gunnar Solskjaer, they have now missed out on potentially four pieces of silverware under the Norweigan boss as they lost their fourth semi-final on the bounce.
Story of the game
Twice in the opening five minutes the ball was in the back of the net, but both times they were correctly ruled out for offside. It looked like two very different sides on the pitch compared to the stalemate at Old Trafford less than a month ago as both teams came out on the front foot with purpose.
Bruno Fernandes attempted a curling effort which was headed for the top right corner but Zack Steffen - who replaced the sidelined Ederson (due to testing positive for the Coronavirus) - pulled off an excellent save.
Kevin De Bruyne came closest for the visitors in the first half as his rocket of a shot struck Dean Henderson's post.
Phil Foden then had the ball in the back of the net as he calmly slotted past Henderson before the linesman ruled it correctly, for the third time, offside.
At half-time the derby was goalless.
Stones gave City the lead five minutes into the second-half from Foden's left-footed curling free-kick. Stones got his thigh onto it and that contact was all that was required to take it past Henderson. Harry Maguire was caught ball-watching as well as Luke Shaw allowing Stones to get in front of him.
Chasing the game, United were left vulnerable at the back and City were in search of their second. Riyad Mahrez put his left foot to use from distance which required an acrobatic save from Henderson to keep his side just a goal down.
Solskjaer threw on Mason Greenwood in an attempt to change the game but it was his player of the season, Fernandes, who had the best opportunity to equalise. Paul Pogba cut it back for Fernandes who attempted another curling effort, this time wide of the goal and failed to test Steffen.
City won another corner which United failed to deal with, this time the ball fell to Fernandinho on the edge of the box who drilled a first-time volley past Henderson to double the lead.
City then kept hold of possession as United were down and out to complete an impressive performance from Guardiola's side.
City with the chance to win fourth league cup in a row
City have played in the last three league cup finals with an aggregate scoring of 5-1, and were victorious in all. As for form this season, Guardiola's side extend their unbeaten run to 12 games and break United's unbeaten run of seven.
United are still in search of their first triumph under Solskjaer. The United boss has now failed in four semi-finals, three of which have been domestic competitions. They last won the Europa League in 2017 under Jose Mourinho. Mourinho who is now in the final of the league cup with Spurs, has the opportunity to beat Guardiola to give his side their first major trophy in over 12 years.