In the win, John Navarre threw a pair of touchdown passes to Braylon Edwards as the Wolverines clinched the Big Ten title in the 100th meeting between the storied rivals.
"It's a dream come true," Navarre said. "We stubbed our toe early in the season a couple of times, but we always kept up hope. It's great to go to the Rose Bowl."
The fourth-ranked Buckeyes (10-2, 6-2), who had been first in the nation against the run, were in line to possible defend their national championship. Saturday's loss dropped them out of the BCS title picture. The biggest beneficiary figures to be second-ranked Southern California.
The Wolverines (10-2, 7-1) jumped to a 21-0 lead in the second quarter and held off a late Buckeye rally to clinch at least their first trip to the Rose Bowl since 1997.
Navarre completed 21-of-32 passes for 278 yards in his first career win over OSU, which lost to Michigan for the first time in three meetings under Coach Jim Tressel.
"We did not do the things necessary to be a champion, so we tip our hats to Michigan," Tressel said.
The game attracted 112,118, the largest crowd in college football history.