Shelbourne were left thanking Sligo Rovers' striker Marcus Hallows as his brace of goals some 130 miles away secured their InterToto Cup place.
Waterford were very effective on the few occasions they got forward and took the lead after 29 minutes. Derek McGrath ran through and volleyed powerfully past Danny O'Leary.
After 60 minutes Sean Riordan sealed victory with a header from Robbie Griffin's corner.
Shelbourne: O'Leary; Heary, McCarthy, Campbell, D Geoghegan; D Baker, Doolin, Byrne, R Baker; Sheridan, L Kelly. Subs: Fitzgerald for Doolin (55 mins), B Kelly for Byrne (70 mins).
Waterford United: Devine; Smith, T McGrath, Riordan, Frost; Kirby, D McGrath, Harkin, Kelly; Gannon, Iorfa. Subs: Flood for Frost (29 mins), Griffin for Kelly (51 mins), Wood for D McGrath (69 mins).
Referee: P Whelan (Dublin)