Real will play Japanese champions Kashima Antlers in Sunday's final in Yokohama, looking to become world champions for the second time in three years and earn a record 21st international title.
Real Madrid booked their place in the Club World Cup final by beating Club America 2-0 on Thursday, although FIFA's new video technology was again the talking point after confusion reigned following Cristiano Ronaldo's injury time strike.
Real will play Japanese champions Kashima Antlers in Sunday's final in Yokohama, looking to become world champions for the second time in three years and earn a record 21st international title.
Karim Benzema's classy one touch finish put Real ahead in first half injury time, easing their nerves after they had struggled to find their rhythm in the opening 45 minutes against the Mexican side.
Newly crowned Ballon d'Or winner Ronaldo rounded off a far stronger performance from Real after the break with powerful finish in the 93rd minute.
The goal looked to have been ruled out as offside by Paraguayan referee Enrique Caceres before, in consultation with the video referee, eventually giving the goal.
Real initially struggled to break down the CONCACAF champions in a tight first half and the only opportunity before Benzema broke the deadlock was a Ronaldo header which struck the post.
Zinedine Zidane's side took full control after the break and hit their opponents with frequent counter attacks.
Benzema spurned a free header and Ronaldo saw his stinging effort repelled by goalkeeper Moises Munoz, while substitute Morata wasted a late chance to kill off the Mexicans before Ronaldo's late strike.
Image: Real Madrid's Cristiano Ronaldo celebrates with teammate Lucas Vazquez during their FIFA Club World Cup Semi Final at the International Stadium in Yokohama, Japan on Thursday
Photograph: Issei Kato Livepic/Reuters
