ICE-COOL Graham Dorrans' third penalty in as many games set Albion on the way to a richly-deserved victory - and closed the gap on the automatic promotion places.
The Baggies were buoyed before kick-off by the news second-placed Forest's 19-game unbeaten league run had come to an end at East Midlands rivals Derby.
And Roberto Di Matteo's men took full advantage with a convincing display.
Dorrans broke the deadlock with his 11th of the season in the 18th minute before Roman Bednar's third in four league games on 31 - also his third against the Blades this campaign - gave the hosts some breathing space.
Darius Henderson halved United's deficit three minutes after the break with the game's second penalty, but it was 3-1 only two minutes later thanks to Jerome Thomas' eighth of the term.
The Baggies are now just two points behind Forest with a game in hand, which they play at Blackpool on Wednesday.
Third-placed Albion started the day six points better off than United, who occupied the final play-off spot.
The Baggies were boosted by Dorrans and Bednar shaking off knocks, allowing Di Matteo to name an unchanged team for the fourth successive game.
Abdoulaye Meite, safely back from African Nations Cup duty, and Luke Moore returned to the bench in place of Filipe Teixeira and Shelton Martis.
Kevin Blackwell made two changes, with Henderson and Jordan Stewart coming in for Ched Evans and Andy Taylor.
Albion immediately pushed United onto the back foot and Jonas Olsson went close with a header from Dorrans' corner.
And Thomas' twinkle toes carved out the game's first clear opening on 8.
The winger jinked his way past three Blades defenders before pulling the trigger from 12 yards, only for United skipper Chris Morgan to deny him an almost certain goal with a last-ditch block.
Two minutes later, the South Yorkshire outfit recorded their first effort on goal when they caught Albion napping with a quick throw-in.
Richard Cresswell surged into the box before firing an acute drive at Scott Carson, who blocked for a corner.
But Albion were soon forcing the issue again and got the breakthrough their persistence merited on 18, albeit in slightly bizarre circumstances.
Dorrans and Nick Montgomery challenged for a bouncing ball inside the box and it struck the Blades midfielder's hand.
How much Montgomery knew about it is unclear but referee Mick Russell immediately pointed to the spot - much to the chagrin of the United defence.
Albion were on the wrong end of an even more contentious penalty decision at Ipswich on Tuesday and weren't about to look a gift horse in the mouth.
Dorrans has been lethal from 12 yards in recent weeks and the Scotland international again made no mistake, sending Mark Bunn the wrong way by coolly tucking the ball into the bottom right-hand corner.
Carson was soon forced into a straight-forward save when he comfortably held Jamie Ward's 18-yard snapshot from Stewart's ball - but Albion should have been 2-0 up on 24.
Thomas' inch-perfect ball freed Gonzalo Jara down the right and his low centre was wastefully turned wide by Bednar from six yards.
In the Czech striker's defence, he may have been put off by Chris Brunt's attempt to slide the ball home at the near-post, but it was still a gilt-edged chance.
United were still struggling to get a foothold in proceedings as the game passed the half-hour mark and James Harper was well off target with an ambitious 30-yard effort.
And Bednar soon made up for his earlier miss when he polished off a wonderful Albion move in the 31st minute.
The Baggies broke swiftly from a Blades free-kick played into their box and Brunt, Youssouf Mulumbu, Jara and Bednar combined to send Thomas clear down the left.
The ex-Charlton ace found Bednar inside the box with a gorgeous through-ball and Bednar clinically slotted into the far bottom corner.
Albion were completely bossing the game, although Thomas and Brunt failed to trouble Bunn with two long-range efforts.
But the Baggies almost made it 3-0 in the 41st minute when Stephen Quinn woefully undercooked a back-pass.
The alert Bednar seized on the mistake and rounded Bunn but the angle proved too tight for the former Hearts man who could only divert the ball into the side-netting.
On a rare foray into the Albion box, Olsson had to produce a terrific last-ditch challenge to deny Ward a clear sight of goal.
But the hosts finished the half very much on top and only Jonathan Fortune's block inside his six-yard box prevented Robert Koren converting Thomas' centre after another terrific run by the Baggies winger had set up the chance.
However, the Blades were back in the game within three minutes of the restart.
Mulumbu was penalised for tripping Quinn as he attempted to clear the ball from inside his own box and Henderson blasted the resulting spot-kick past Carson.
Incredibly, Albion's two-goal cushion was intact again within two minutes.
Dorrans sent Thomas clear down the left with a terrific ball over the top and the former Arsenal player jinked inside Fortune before seeing his 15-yard drive deflected past Bunn by team-mate Morgan.
United looked a much more impressive outfit after the break but it was Albion who went close again on 65 when only Harper's last-ditch interception denied Brunt a tap-in from Bednar's centre.
The Blades did not threaten again until the 70th minute when Ward was well off target with an acrobatic far-post volley from Harper's corner.
Back came Albion and Brunt came within inches of sliding home Thomas' low centre after sub Simon Cox's sublime ball had unlocked the Blades defence.
There was never even a hint of a Sheffield fightback as the game drew to a conclusion.
In fact, in the final minute, Dorrans almost added more gloss to the final scoreline when he exchanged a one-two with Bednar and cut inside Fortune before seeing his right-footed curler brillianlty pushed away by Bunn.
ALBION (4-5-1): Carson; Jara (Zuiverloon 70), Tamas, Olsson, Cech; Brunt, Koren (Cox 66), Mulumbu, Dorrans, Thomas (Mattock 88); Bednar. Subs not used: Kiely (gk), Miller, Moore, Meite.
SHEFFIELD UTD (4-5-1): Bunn; Walker, Fortune, Morgan, Stewart; Ward, Harper, Montgomery, Quinn (Yeates 77), Cresswell; Henderson (Camara 73). Subs not used: Bennett (gk), France, Evans, Williamson, Geary.
GOALS: ALBION - Dorrans (18 pen), Bednar (31), Thomas (50). UNITED - Henderson (pen 48).
BOOKINGS: ALBION - Jara (unsporting behaviour 55), Brunt (foul 87), Cech (unsporting behaviour 90+5). UNITED - Quinn (unsporting behaviour 55).
REFEREE: M Russell (Hertfordshire).
ALBION STARMAN: Jerome Thomas.