Gandy’s 57.66 seconds swim saw her make it into the final eight but Fran Halsall’s 58.52 secs time was not good enough for a final place.
And 20-year-old Gandy, who set a British record in the same pool at the trials in March, was delighted to make it into her first Olympic final.
She said: “I’m just so happy to be get through and I've no expectations other than to race my hardest and see where that gets me.
"It’s my first Olympic final so I’m over the moon.”
David Carry finished seventh in the 400m freestyle final as China’s Sun Yang broke Ian Thorpe’s 12-year-old Olympic record to grab gold.
Michael Jamieson, 59.89 secs, and Craig Benson, one minute 00.13 secs, swam well but both missed out on a place in a high-quality 100m breaststroke final.
Team GB produced a good swim to place fifth in the women’s 4x100m freestyle final as Australia took gold in another new Olympic record time.
Amy Smith, Fran Halsall, Jess Lloyd and Caitlin McClatchey combined for a 3:37.02 mins time as the Netherlands and USA completed the podium.