The Canadians, led by Olympic rookie Cheryl Bernard, beat Switzerland 6-5 in a tense semi-final and Anette Norberg's Swedish team easily knocked off China 9-4 in just nine of the 10 regulation ends.
Canada ended the regular competition with an 8-1 record, helped by Bernard's accurate shots under pressure and a loud and highly partisan crowd at the Vancouver Olympic Center.
"I really believe that we earned the right to be here," Canada's Susan O'Connor said. "We're feeling very confident. It's so much fun out there and the crowd is amazing. We're playing well and we're supporting each other."
The Canadians survived a scare in the last end of the playoff, when Swiss skip Mirjam Ott had a chance to score two points and take the game into extra ends but her stone sailed out of contention.
Bernard, 43, and her team showed signs of nerves, something they had held at bay throughout the tournament despite their lack of Olympic experience.
Sweden went 7-2 in the round-robin stage, improving as the tournament went on. China beat them last year to win the world title, but the young Chinese team struggled in their semi.
Inexperience is not an issue for Norberg, who shows little emotion either on the ice or with the media.
"When I'm focused and when I play really well I'm in my own bubble," the 43-year-old said. "They know me and they know I'm there for them even though I'm inside myself, and that's the things you learn from playing together for such a long time."
The gold medal game takes place on Friday. Earlier in the day, Switzerland and China will play for the bronze medal.