The last time the two teams met at Wembley was the 2013 Championship play-off final, in which Kevin Philips scored the winner from the penalty spot to help the Eagles secure promotion.
Yannick Bolasie got Palace off to a flying start in the semi-final, heading home Damien Delaney’s flick-on in the sixth-minute.
Watford pulled one back in the second-half through captain Troy Deeney, but the Eagles perservered. On the hour mark, Pape Souaré whipped in a cross to find Connor Wickham - the striker lost his marker and planted a header firmly in the back of the net to secure a 2-1 win for the Eagles and a place in the FA Cup final.
The Eagles weaved their way through a tricky set of fixtures to get to the semi-final, after encountering Premier League opposition in three of the four prior rounds, with games against Southampton, Stoke City, Tottenham Hotspur and Reading.
This was the club's most recent semi-final appearance, but how many more can you recall? There have been some memorable semi-finals over the last 50 years: check them out - bar play-offs - below…
January 2012: League Cup v Cardiff City
Palace came agonisingly close to making it to their first League Cup final in history, after narrowly losing out against Cardiff City in 2012. The Eagles won the first leg 1-0 at Selhurst Park thanks to an Anthony Gardner header, but the Welsh outfit levelled the tie in the second leg and progressed on penalties.
January 2001: League Cup v Liverpool
The Eagles looked on course to make it to the final of the League Cup after they won the first leg 2-1 at Selhurst Park thanks to goals from Andrejs Rubins and Clinton Morrison, however it wasn’t to be as they lost the return leg at Anfield.
February-March 1995: League Cup v Liverpool
The first of two semi-finals for the Eagles in the 1994/95 season. The Eagles almost held on to record a draw in the first leg at Anfield, however a late goal from Robbie Fowler gave Liverpool a 1-0 lead going into the second leg. The same scoreline was unfortunately repeated at Selhurst Park, with another goal from Robbie Fowler knocking the Eagles out.
April 1995: FA Cup v Manchester United
Yet another close-fought affair which saw the Eagles narrowly miss out on a second FA Cup final in five years. The tie needed to be settled with a replay after the first match ended 2-2 at Villa Park after extra time. United won the replay 2-0 after both sides were reduced to 10 men.
February-March 1993: League Cup v Arsenal
Former Palace striker Ian Wright knocked the Eagles out after scoring in both legs of the League Cup semi-final. Arsenal ran away 5-1 winners on aggregate.
December 1991: Zenith Data Systems Cup Southern Section v Chelsea
Palace were the reigning champions of the Zenith Data Systems Cup going in to the 1991/92 competition and were on course to retain the trophy before falling to a 1-0 defeat at the hands of London rivals Chelsea.
February 1991: Zenith Data Systems Cup Southern Section v Luton Town
The semi-final which set Palace on their way to victory in the Zenith Data Systems Cup. Eddie McGoldrick got the Eagles off to a flying start with a goal in the third minute at Selhurst Park. Though Luton managed to pull one back, a brace from Wright saw the team progress to the Southern Section final against Norwich and they ultimately went on to win the cup against Everton.
April 1990: FA Cup v Liverpool
A game that is written into the Palace history books. Coming into the game on the back of a 9-0 defeat to Liverpool seven months prior, the Eagles had a point to prove and went out to overcame all odds by winning 4-3 after extra time.
Goals from Mark Bright, Gary O'Reilly and Andy Gray were enough to bring the Reds to extra time, where Alan Pardew burst in at the back post to head home the winner.
February 1990: Zenith Data Systems Cup Southern Section v Swindon Town
A tight affair at Selhurst Park in which Andy Gray scored the only goal for the Eagles in a 1-0 victory. This set up a clash in the Southern Region final against Chelsea that the Eagles could not progress from.
February 1989: Full Members’ Cup v Nottingham Forest
The Eagles faced tricky opposition in the form of Nottingham Forest in their first ever Full Members’ Cup semi-final. Palace fell to a 3-1 defeat, with a goal from Wright not proving enough against the First Division outfit.
April 1976: FA Cup v Southampton
The Third Division Eagles went on a remarkable run under Malcolm Allison to reach the 1976 FA Cup semi-final against Southampton, having played all four of the previous ties leading up to the semi-final away from home.
After recording back-to-back upsets against high-flying Leeds and Chelsea, a 1-0 victory away at Roker Park set up the clash against Southampton. It wasn’t to be for Palace, however, as they fell to a 2-0 defeat.
May 1973: Anglo-Italian Cup v Newcastle United
After an unbeaten performance in the continental group stage against Bari, Fiorentina and Lazio, Palace progressed to face Newcastle United in a two-legged semi-final. However, they unfortunately lost 5-1 on aggregate to the Magpies - who went on to lift the trophy.