Bolasie gave Palace the perfect start when he found the net in the sixth minute of the game.
Watford captain Troy Deeney levelled just after half-time before Connor Wickham popped up with the decisive header just after the hour-mark.
Crystal Palace 2-1 Watford
Emirates FA Cup semi-final
Wembley Stadium connected by EE
Sunday 24 April 2016
Victory sets up an FA Cup Final against Manchester United and Bolasie was on cloud nine after the result.
Bolasie said: “I’ve grown up around here so it’s a dream come true. First of all I go to the Emirates and get a goal there so it’s been a double bubble for me this week.
“Hopefully now we can look forward to the Final and bring something for the fans
“We saw a couple of videos [of Palace’s previous Cup semi-final] yesterday that put us in the mood to get through to a Cup Final, which is a delightful thing for us and for the fans; I don’t think they deserve anything less than that.”
Palace were in control after Bolasie’s early opener but were given a fright when Deeney beat Scott Dann to Ben Watson’s deflected free-kick to put his side back on level terms.
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The Hornets could not keep it all square for long however as Wickham held off Nathan Ake and headed home Pape Souare’s first-time cross.
Wickham was understandably delighted to get the winner and repay the fans for their support during Palace’s recent struggles in the Premier League.
“We have been through a rough patch of late but we got the result today and that’s what matters,” he said.
“We have given the fans something to look forward to and the boys have performed fantastic – I don’t think it’s anything less than we deserve.
“You can see what it means to the fans. It’s not just the personal performance. Obviously it’s great to score goals on one of the biggest stages in the world, but the team performed well and we deserved it.”
The Final will take place at Wembley on Saturday 21 May.