Holders Spain swept aside Norway 3-0 in Netanya while Italy needed a late goal from Liverpool striker Fabio Borini to defeat the Dutch 1-0 in Petah Tikva.
The final will be in Jerusalem on Tuesday. Italy are looking for a sixth title since the biennial competition began in 1978 while Spain go in search of a fourth crown.
The teams have met in two previous finals, Italy coming out on top in 1996 and Spain winning in 1986.
The Italians used a counter-attacking approach against the Dutch who had most of the possession but failed to capitalise.
Borini grabbed the only goal in the 79th minute when he beat diving goalkeeper Jeroen Zoet.
"Only the best teams can overcome the difficulties such tournaments present and it was particularly tough for us today against Netherlands," Italy coach Devis Mangia told reporters.
The Spanish forced a series of saves from Norway's impressive goalkeeper Orjan Nyland Haskjold before Rodrigo poked a loose ball into the net just before half-time.
Norway were more threatening in the second half without really troubling Spain keeper David de Gea who has yet to concede a goal in four games at the finals.
Isco conjured a brilliant effort to kill off the game three minutes from time and substitute Alvaro Morata made it 3-0 from a tight angle in stoppage time, his fourth goal of the tournament.
"We played a sensational first half... we had some great opportunities but their goalkeeper was excellent," said Spain coach Julem Lopetagui.
"They pressured us a lot in the second half and we were not as comfortable on the ball."
