The two countries have also qualified for the U17 Africa Cup of Nations tournament
Uganda U17 have qualified for the U17 Council for East and Central Africa Football Associations (Cecafa) championship after defeating Djibouti by a solitary goal in the semi-final played on Sunday.
Oscar Mawa scored the only goal for the Cubs to break the hearts of their opponents.
Uganda came into the match as favourites owing to their good run in the annual competition.
Djibouti were the surprising semi-finalists given they had been ranked outside the favourite teams who were tipped to progress in the junior tournament.
A 1-1 draw against Tanzania which is their second such result in Group B was enough to seal their place. In their opening match, they had held Rwanda, a side that Serengeti Boys defeated 3-1, to a goalless draw.
It looked like they will defeat the Cubs until Mawa scored the winner in the 89th minute. It was his sixth goal in the competition.
In the second semi-final, Tanzania needed post-match penalties to make it to the final after settling for a 1-1 draw in regular time.
Omari Sultan Omari opened the scoring after 38 minutes in favour of the Tanzanians. However, the Ethiopians fought back and managed to equalize in the 71st minute.
In the shoot-out, Tanzania converted four penalties while Ethiopia managed to convert three of them.
On reaching the final, the two nations have qualified for the U17 Africa Cup of Nations.
The two countries will now meet in the final with Tanzania hoping to avenge the defeat suffered by their U20 side against the Hippos.
The Ngorongoro Heroes suffered a 4-1 loss to their neighbours to be crowned.
The Hippos got the goals from Richard Basangwa, Steven Sserwada, Ivan Bogere and Kenneth Semakule while the immediate former champions scored their only goal via Abdul Suleiman.
Djibouti and Ethiopia will play each other to determine who will finish third in the competition.
Kenya, who were among the favourites, fell in the group stage. They played to a 2-2 draw with Ethiopia before falling 5-0 to Uganda. Hosts Rwanda were also sent home early. They drew with Djibouti and fell 3-1 to Tanzania.