The Ulster U-21 final on Wednesday night will be between Donegal and Cavan after both sides came through their respective semi-finals at the double bill at Brewster Park Enniskillen on Saturday afternoon.
Derry went into their semi-final as favourites but on the day they can have few complaints as they lost out to a fired up and well drilled Donegal side.
Dermott Molloy, James Carroll and Michael Murphy all had early Donegal points before the latter grabbed the only goal of the game at the beginning of the second quarter.
Derry were strangely subdued and all they had to show for their first half efforts were three points with Aaron Kerrigan and Lee Moore both on target.
A couple of minutes before the break Donegal were reduced to 14 men when Peter McGee was straight red carded but if anything they raised their game after that.
In the opening 10 minutes of the second half they tore the Derry defence apart on a number of occasions with Leo McLoone, Murphy and Daniel McLaughlin all splitting the posts as they led 1-9 to 0-3.
James Kielt took his personal haul for Derry to half a dozen, all from placed balls, but Donegal always had the upper hand and were worthy winners.
Boasting players from their talented minor team that reached the All-Ireland final three years ago, Derry had high hopes, but they exited the championship with a whimper.
Derry: Warnock, Bell [0-1], Lagan, Duffy, Nevin, Doyle, McCallion, Herron, O’Boyle, Henry, Kielt [0-6], McGuckian, Kerrigan [0-1], Moore [0-2], Kennedy. Subs: Cleary (for Henry), Dillion (for O’Boyle), McGoldrick (for Kennedy), Mullan (for Cleary), McFeeley (for Lagan).
Donegal: Boyle, Doherty, Boyle, McGrath, Walsh [0-1], Mulhern, Classon, McGee, Curran, McHugh, McLoone [0-2], Molloy [0-3], Carroll [0-1], Murphy [1-2], McLaughlin [0-2]. Subs: McFadden (for Carroll), McGinley (for McLaughlin), McKinley (for Curran).
Referee: L Smyth (Down).