Hosts Jersey beat Guernsey by four wickets to top the European T20 group and advance to the ICC World Twenty20 Qualifier in July.
The win for Neil MacRae's side, coupled with Italy's final-day defeat, means the islanders finish first, above Denmark on net run rate.
Jersey could come up against Afghanistan and the Netherlands in the next stage, which will be hosted in Ireland and Scotland.
Guernsey finished fourth in the table.
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"I think certainly in T20 format this will be our biggest ever result," MacRae told BBC Radio Jersey.
"It's been an unbelievable effort from all 14 players and they deserve huge credit."
Having won both their games on the opening day, Jersey lost to Denmark by seven wickets, former Derbyshire county player Freddie Klokker doing the damage with a speedy 31 runs.
However, they bounced back with a 19-run victory later in the day against France to give themselves a chance of winning the tournament.
"We had a magnificent start on Saturday in the win over Italy and I was just getting a sense that we were starting to excite our supporters," added MacRae.
"To do the business, play the best that we could and to win the game - I think we deserved to win this."
Corne Bodenstein top-scored for Jersey against their island rivals with 36 runs from 28 balls, while Nat Watkins took four Guernsey wickets.
Jersey will be one of 14 teams in the next stage of qualification, with the top six making it to the first round of the global tournament in India.