Ricardo Vaz Te scored the winner three minutes from time as the Hammers returned to the top-flight after finishing rock bottom last season under Avram Grant.
Carlton Cole scored the opening goal after 35 minutes but that was cancelled out three minutes after the break by Blackpool winger Tom Ince.
But Portuguese winger Vaz Te struck the crucial late goal as Sam Allardyce guided the Hammers back into the Premier League 18 months after he was sacked by Blackburn's owners Venky's.
Blackpool came into the match on a nine-match unbeaten run and spurned three great chances in the opening 15 minutes.
Matt Taylor's attempted chest-back to Rob Green was too weak, but the England keeper then produced a superb one-handed save at the near post from Stephen Dobbie with the ball bouncing off the upright.
Quick one-touch passing then saw Matt Phillips through on goal but the ball was stuck between his feet, his shot at Green tame. And soon afterwards a bad mistake by Guy Demel allowed Phillips through: he cut inside Winston Reid but narrowly curled his shot past the far post.
The Hammers then came into the match, Vaz Te slashing a shot into the side netting, Cole heading over the bar and Jack Collison curling an effort wide.
And the breakthrough came when a diagonal ball from the left by Taylor was taken down first time by Cole, who had pulled off the back shoulder of Ian Evatt, and he fired his shot past Matt Gilks who was glued to his line.
Vaz Te then had a great chance to extend the lead but he fired his shot wide and that looked costly as Ince levelled swiftly after the interval.
Ince, booed by the West Ham fans after his father Paul’s acrimonious exit from Upton Park in the 80s, latched onto a long ball from Matt Phillips and fired first time into the far corner.
Two years ago Blackpool came from behind to win the Championship play-off final - the only side to do since 2003 - and they looked the more likely as Taylor hooked off his own line after marauding centre-half Alex Baptiste lifted the ball over the outrushing Green.
Gilks made a sharp one-handed stop, low to his right, from Cole’s shot on the turn but then Dobbie wasted another great chance. Neal Eardley founds the Scot standing unmarked on the penalty spot but he muffed his shot wide.
Evatt then had a deflected shot cleared off the line by Mark Noble before Kevin Nolan smashed a volley against the crossbar.
Extra-time was looming but Nolan found himself in space down the left and his cross somehow fell to Cole in a packed penalty area. Gilks came off his line to smother the effort but the ball fell into the path of the mid-season signing from Barnsley to smash the ball into the roof of the net and earn his side a lucrative return to the top tier of English football.
It was a sweet ending for Allardyce, who cut his managerial teeth with Blackpool before he was ruthlessly shown the door after narrowly missing out on promotion to Division One in 1996, and who has been often criticised by his own fans this season.