A goal from Queen Joseph and a brace from Awawu Bashiru secured the historic victory for Akeem Busari's side at the Mohammed VI Football Complex in Rabat.
The Flamingos went into the encounter full of confidence after beating Venezuela 1-0 in the quarter-finals, thanks to an 89th-minute penalty from captain Azeezat Oduntan.
On the other side, the South Americans had defeated China 2-1 in the quarter-finals after overcoming Poland 8-7 on penalties in the round of 16.
Nigeria started brightly against Brazil and created several scoring opportunities in the first half with Joseph, Mary Dunstan and Oluwakemi Adegbuyi all going close to breaking the deadlock, but goalkeeper Nathy and her defence kept Nigeria at bay.
Despite the Africans’ dominance, both teams went into the half-time break with the score goalless.
The Flamingos continued to press after the restart and eventually took the lead in the 56th minute.
Adegbuyi cut inside from the right and sent a shot into the path of Joseph, who calmly slotted the ball home to put Nigeria ahead.
Busari's side doubled their advantage in the 71st minute when Bashiru's cross sailed over the Brazilian defence and goalkeeper Nathy before finding the bottom corner.
Bashiru grabbed her second goal in the 80th minute after receiving a pass from Oluebube Umejiaku. The forward beat a Brazilian defender before placing the ball into the bottom corner.
Despite looking dead and buried, Brazil pulled a goal back in the 89th minute through Greise Kelly, who scored with a header, but it was too late to prevent Nigeria from advancing.
"Just like against Ghana, when you make technical mistakes against teams that are more physical that those we are used to face, you will pay for that," Brazil coach Rilany said after the game.
"Against Ghana, we made a lot of mistakes in simple passes, and that happened again today. We suffered because of it. These are teams that defend and attack with two blocks and offer a lot of space inside the pitch. But we couldn’t take advantage of that because of these errors. We suffered a lot from the transitions and counter-attacks."
Nigeria will now face Japan in Saturday's final after the Asian side defeated North Korea 4-1 on penalties following a 1-1 draw in their semi-final.
