The matchup will mark the first time that two teams from the same city will compete in a European cup final, per Sports Illustrated.
The match will also be the second all-Spanish final after Real Madrid met Valencia in 2000, per ESPN Stats & Info.
Real Madrid booked their ticket with a 5-0 aggregate win over defending champions Bayern Munich, which included a 4-0 rout in Germany on Tuesday.
Atletico Madrid qualified for their first Champions League final—they contested the European Cup final in 1974—by beating Chelsea 3-1 on aggregate, with every goal coming during Wednesday's second leg at Stamford Bridge.
Chelsea jumped out to a 1-0 lead Wednesday, thanks to a 36th-minute goal from Fernando Torres, who started his professional career with Atletico.
However, Adrian was able to level the contest just before half-time, and Atletico added two more in the second half, thanks to a penalty from Diego Costa and the final clincher from Arda Turan.
With the final scheduled for May 24 in Lisbon, Portugal, the fact that both teams continue to fight for the La Liga title increases the drama leading up to the match.
Atletico currently top the table with 88 points, while FC Barcelona sit at 84 points and Real Madrid at 82.
However, should Real Madrid earn all three points from their game in hand versus relegation-bound Real Valladolid, Los Blancos would ascend to just three points behind Atletico.
Further, Barcelona hosts Atletico in the La Liga season finale on May 18, a meeting that could potentially decide the title winner.