Goals from Paulinho and Matheus Cunha either side of the break sealed the victory for the Brazilians who progress to the final to face Japan, whilst Ireland will face Mexico in the 3rd/4th place play-off.
Brazil could have been in front within the first five minutes after the referee harshly penalised Conor Masterson for a pull-back in the area but captain Douglas Luiz placed his effort wide of the left-hand post.
In the 15th minute, Brazil did go ahead. Bayer Leverkusen forward Paulinho played a one-two on the edge of the area before he placed his shot into the bottom corner.
Ireland grew into the game and had a chance to level four minutes before the break. The industrious Darragh Leahy switched possession for Lee O'Connor who found Connor Ronan in the area but the Wolverhampton Wanderers man fired over.
Brazil sealed the win almost straight after the break. RB Leipzig striker Matheus Cunha found space on the edge of the area and he squeezed the ball into the near-post to score.
Ireland continued to work hard and could have found a way back into the game in the 54th minute when Ronan found O'Connor on the right and his cross was volleyed over by Aaron Connolly.
Ireland ended the game strong and with 15 minutes remaining, Adam Idah played the ball to Connolly but his powerful effort was well saved by the keeper as Brazil book their Maurice Revello Toulon Tournament final spot.
"The players can be really proud of their efforts today. Brazil are looking to retain their Olympic gold medal in Tokyo and this is the team who will be looking to do that," said U-21 boss Stephen Kenny.
"But we caused them problems and continued to battle but also looked to play. I thought our back-four were magnificent and everyone of the players gave everything for the cause today.
"When you consider the amount of minutes our team have played in such a short amount of time whilst Brazil were able to field their second string in their final group game and effectively had a week off, it was always going to be difficult for us.
"We want to finish on a high though, this has been a fantastic tournament so far so we look forward to the Mexico game on Saturday where we'll be looking to seal third spot in the tournament."
Republic of Ireland: Kelleher (GK), O'Connor, Leahy, Masterson, O'Shea, Coventry, Molumby (C), Idah (Drinan 82), Ronan (Taylor 66), Mallon (Power 54), Connolly (Barrett 82).
Brazil: Ivan (GK), Emerson (Guga 46), Lyanco, Murilo, Iago, Douglas Luiz (C), Matheus Henrique (Lucas Fernandes 78), Pedrinho, Antony (Wendel 56), Matheus Cunha, Paulinho (Mateus Vital 87).