The Galaxy, featuring David Beckham in midfield, lost 2-1 in Seattle on Sunday but a 3-0 first leg win last week that was enough to secure them a chance to defend their title on December 1.
Houston, with a 3-1 lead from their home leg, drew 1-1 in D.C. for a 4-2 aggregate win that books them their fourth final appearance in seven years.
LA beat Houston 1-0 in last year's final which, like this year's, will be held at the Galaxy's Home Depot Center.
Backed by a passionate 44,575 crowd in the pouring rain at CenturyLink Field, the Sounders roared at the Galaxy from the outset and LA struggled to cope.
Sounders striker Eddie Johnson had a goal harshly ruled out for offside in the 13th minute but moments later he put his team ahead.
The former Fulham striker raced on to a long ball, bullied LA defender Omar Gonzalez away and lashed home a powerful first-time drive.
Seattle needed two more goals to take the game into extra-time and they took a step towards that in the 57th minute with a brilliant diving header from Zach Scott, who met a perfectly delivered Christian Tiffert corner at the near post.
However, the Sounders were stunned when referee Mark Geiger awarded LA a penalty after an attempted cross from Robbie Keane struck the outstretched arm of Adam Johansson.
The Seattle players argued the contact was not deliberate but Keane kept his cool from the spot and his 68th minute goal deflated the fans and a Sounders team that had felt they were close to a remarkable comeback.
There were angry scenes after the final whistle with several Sounders players surrounding Geiger and their Cuban-born midfielder Osvaldo Alonso was sent off with a second yellow card.
The Galaxy, who were without the injured Landon Donovan in attack, were certainly breathing a sigh of relief before being handed the Western Conference trophy.
"Seattle are a good team, certainly the better team today, but its about getting to the final and we did that," said Keane.
DC needed an early goal if they were to create any kind of real pressure for Houston but they struggled to develop chances against a well-marshaled Dynamo defence.
Chris Korb had a long-range effort saved by Houston keeper Tally Hall but it was Dynamo who grabbed the lead with a well-worked goal 12 minutes before the interval.
Brad Davis weaved his way to the byline and pulled the ball back for Boniek Garcia, who made no mistake from close range.
DC pushed forward after the break after bringing on returning Canadian playmaker Dwayne De Rosario but they lacked poise and invention until Branko Boskovic's well taken solo effort.
"We work hard, work together and do whatever it takes, I'm proud of this group of guys and we are excited to be back," said influential midfielder Davis, who missed last year's final due to injury.
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