Ian Holloway's side will face West Ham United in the play-off final at Wembley on May 19 - dubbed the richest game in football due to the prospect of enjoying the moneyed Premier League's television millions - despite blowing a 2-0 lead as Birmingham threatened to force the match to extra-time.
On-loan Swansea forward Stephen Dobbie forced the ball home from eight yards out after Curtis Davies was forced to block an Alex Baptiste overhead kick as Birmingham goalkeeper Colin Doyle was caught out at his near post on the stroke of half time.
The eager Matthew Phillips doubled Blackpool's lead when he exposed some shoddy home defending to slip the ball beyond Doyle from close range via a post.
Chris Hughton's men netted their first of the night on 64 minutes when Nikola Zigic scored from Chris Burke's pass despite appearing to be offside.
Davies then made amends for his own goal in Friday's 1-0 defeat in the first leg in Blackpool when he rose to power home a header from Jordan Mutch's corner with 17 minutes left, but there was to be no third goal for a Birmingham side who were playing their 62nd game of the season.
Blackpool players partied with the visiting fans in the rain as the home supporters were left to contemplate another season in the Championship a year after they were relegated from the Premier League alongside Blackpool and West Ham.
Blackpool will start the final as underdogs having lost 4-0 and 4-1 to West Ham during the season, but will aim to replicate their 3-2 win over Cardiff City in the play-off final at Wembley two years ago.
The game began at a frantic pace with Doyle saving from Thomas Ince on four minutes before Ince then seemed to be hauled back by David Murphy as Doyle again saved in the opening minutes.
It looked a penalty, but Birmingham survived that call as Burke drove an effort wide while Marlon King flicked a volley off the top of the bar and over at the other end.
Blackpool goalkeeper Matthew Gilks was also forced to make an instinctive stop from King after a terrific run and cross from substitute Nathan Redmond before Davies equalised on the night, but it was to prove immaterial as Blackpool came to their senses to see out the added five minutes in some comfort.