Scunthorpe needed to better Barnsley's result at Wigan to secure the final play-off position but the Tykes' victory ended their top-six ambitions.
Tom Hopper put the Iron ahead as he slid Paddy Madden's deflected effort past keeper George Long from 15 yards.
Madden fired past Long after half-time as Scunthorpe kept pushing but they ended the season in seventh place.
Scunthorpe started the day on equal points with Barnsley and began strongly, with Luke Williams' long-range effort well held by Long.
Billy Sharp curled Matt Done's cross wide of the post as the Blades struggled to make any impact, before the unmarked Hooper tapped the Iron's first goal past Long.
The home side looked stronger after the break as Sharp saw his low effort from distance turned wide, but a defensive mix-up in the box allowed Madden to score his 23rd of the season.
Long pulled off two excellent saves as Williams and Madden came close for the visitors, but Barnsley's win scuppered their chance of reaching the play-offs.
Scunthorpe United failed to make the League One play-offs despite beating Sheffield United at Bramall Lane.