Argentine forward Claudio Bieler gave the South American champions the lead in the fourth minute, pouncing on a ricochet to score after his initial effort had been blocked.
Midfielder Luis Bolanos added a second goal for Quito-based LDU with a curling free kick in the 26th minute after a disputed handball decision on the edge of the penalty box.
"Now we are the second best club team in the world," LDU's Argentine manager Edgardo Bauza told reporters. "We have a chance to be number one.
"We may not have many star players but we've dreamed of playing in the Club World Cup and carried the hopes of Ecuador and South America. I'm so proud of the players."
This year's surprise Libertadores Cup winners take on European champions United or Gamba Osaka of Japan in Sunday's final in Yokohama.
United play Gamba on Thursday.
NIGGLY GAME
Pachuca coach Enrique Meza refused to make excuses after losing a niggly game watched by 33,000 at Tokyo's National Stadium.
"We made mistakes and got punished," said Meza, whose side had 66 percent of the possession but were unable to find a killer touch in front of goal.
"When you make errors you have to pay the consequence. We only recovered our composure after the damage had been done and by then it was too late. LDU just wanted it more."
United are overwhelming favourites to become the first British side to win the Club World Cup since it was expanded beyond Europe and South America.
Liverpool were beaten 1-0 by Brazil's Sao Paulo in 2005 in the first year of the new-look FIFA competition.
United won the tournament's forerunner, a one-off match between the champions of Europe and South America, with a 1-0 victory over Brazil's Palmeiras in 1999.
