Just a heads up: They raised the prices on AP, so this guide's math may be a little off!

First I'll just mention the two other deals on Annual Passports.
-The Costco deal gets you $50 off (if you use the $50 giftcard to upgrade to a Premium AP).
-The birthday offer gets you $69 off if you upgrade.

This guide is intended for people who want a Deluxe or Premium Pass, but the information if helpful to anyone planning a trip to the Disneyland Resort.

Some information for helping you decide which pass to get:
-Comparison chart for Disneyland Annual Passports

Guide to cheap Disneyland Annual Passports:
Any currently valid ticket can be upgraded to an Annual Pass [AP] by paying the difference between the price of the AP and the ticket’s face value. The AP you are upgrading to must have a price higher than the face value of the ticket you are upgrading with.

For example:
A one-day one-park ticket with a face value of $69 can be upgraded to the cheapest AP, the So Cal. Select which costs $134. By paying the $65 difference, the ticket can be upgraded to the So Cal Select AP.

A five-day park hopper ticket with a face value of $194 can be upgraded to the Deluxe AP which costs $269, but CANNOT be upgraded to a So Cal or So Cal Select because those AP cost less than $194.

This policy opens up the opportunity for extremely discounted Annual Passports. You may be able to purchase the last day of someone’s park hopper ticket and use that ticket to upgrade to an Annual Passport by simply paying the difference.

Find someone with a valid used park hopper ticket and pay them for it. The difference between what you pay them for their ticket and the ticket’s face value is your discount on an Annual Passport. Many sellers know about the upgrade system, but they are from out of town and want to make some money back on their ticket or they don’t have an urge to buy an AP for whatever reason.

1. Find a VALID used park hopper ticket with at least one day left on it with a high face value ($174+).
2. Buy the used park hopper from the seller (average price is $60 to $70).
3. Take the ticket while it's still valid to Disneyland ticket booth.
4. Tell them you want to upgrade your park hopper ticket to an annual pass by paying the difference.
5. Process your pass at the Main Street Bank on Main Street, USA.

For example (this actually happened):
Three of my friends wanted to buy AP for Disneyland. I searched the OC craigslist for “used disneyland” and “disneyland upgrade” to find sellers with a 6-day park hopper ticket that had only one day left. I found a guy who came in from Las Vegas with a group and had several tickets each with one day left, and each with a face value of $194. My friends paid $70 for each of the 3 used tickets he had, and they then used the tickets to pay only another $75 to upgrade to the Deluxe AP ($194 face value + $75 difference = $269 Deluxe Annual Passport). Since they paid $70 for the used tickets, their total out of pocket was $145 for their $269 Deluxe AP- a savings of $124 (47% off).

IMPORTANT NOTES:

-Double check the dates the ticket is valid, and make sure you upgrade during those dates. Don’t risk being turned down because you were a day late.

-There is no way to know when a ticket was used or if it is still valid unless you actually go to a Disneyland ticket booth. If possible, meet the seller there and don’t pay them until after the transaction is completed and you have your receipt for your AP.

-Make sure the ticket is NOT signed. Tickets that are signed belong to the person who signed it, so make sure the used tickets you buy are NOT signed.

-Have the seller write down the dates the ticket was used. Some Cast Members at the ticket booth may ask when it was used to make sure you’re the one who used it.

-If you can’t meet the seller at a Disneyland ticket booth, get their contact information just the way you would like any other craigslist transaction.

-If an eBay seller scams you with out of date tickets, PayPal will only check to see if the tickets were delivered. BUYER BEWARE, and I again suggest meeting in person.

-If you’re not sure how it works, call Disneyland at (714)781-4400 they will tell you the exact same thing. DO NOT MENTION YOU WILL BE BUYING SOMEONE ELSE’S USED TICKETS. TELL THEM YOU ARE PART OF A GROUP AND HAVE A TICKET ALREADY THEN ASK THEM ANY QUESTIONS YOU HAVE.

-Remember that the discount you can get is the difference between what you pay the seller and the face value of the ticket. The higher the difference, the better the deal.

-The pass will be predated to the first day the park hopper was used (typically no more than 2 weeks ago).

Here's one example of a seller. The tickets are for sale at $60, and the face value is $174. This would get $114 off a Deluxe or Premium AP.

Also, here's a quick guide to eating like a FW'er at Disneyland (to try and alleviate the trolling "cost of food kills the deal".

Food
Disneyland allows you to bring in outside food, but asks that you use the picnic areas outside of the actual park. All bags are searched before entering the park, but food IS allowed past this point- just don’t try to bring in metal cutlery or glass bottles.

This is the main way to save money at Disneyland- BYO food and drinks. I highly recommend bringing a backpack loaded with snacks, drinks and water.

Drinks
For soda, Disneyland sells 20oz bottles of Coke for $2.75 ($3.00 in some locations). Costco sells the exact same bottles for .75 in vending machines. Stock up and grab 8 bottles for $6 from Costco instead of just 2 at Disneyland for the same price. They may warm up a little, but just go into a cafeteria-style restaurant and ask for a cup of ice. The Cast Members are happy to oblige, especially on hot summer days. For water, pick up a 20 pack of 1-liter bottles for $6 at Costco as well. This means you’ll have a 33oz bottle of KS for .30 instead of picking up a 20oz Dasani for $2.75. Disneyland now sells Monster Energy, so feel free to take some of those in the park as well. Just tell security if they ask that you bought them from inside the park the day before. It's not outside food if they sell it inside the park.

For snacks, just stop by Costco and load up on salty and sweet stuff. Don’t try to sneak in a rotisserie chicken.

There is an AMPM at the corner of Disneyland Drive and Ball Rd. If you’ve never had their food, I wouldn’t really blame you (after all, it’s gas station food). But they sell very big chicken sandwiches (similar to Burger King’s) for $1.29. You can load it up with lettuce and mayo, or smother it in BBQ sauce (they have a small area where you add what you like). It’s fried, it’s fatty, but it’s incredibly tasty and filling and the average guest walks 5 miles while at Disneyland, so it’s forgivable.

Or you can just walk to Harbor Blvd. and go to McDonalds.

Parking

-$12 per day at Mickey and Friends Structure.
-Free at Mickey and Friends Structure with a Premium Annual Passport of Annual Parking Pass.
-Free at Downtown Disney lot (for first 3 hours), $6 for each additional hour.
-Free in nearby residential areas.
-Free at the hotel you're staying at.

Hotels
These are the cheapest hotels within walking distance to the tram that takes you directly to Disneyland. The intersection at Ball Rd and Disneyland Drive is a 1/2 mile walk from the tram pick up area, and these hotels are right by that intersection.

Days Inn Anaheim West at Disneyland Drive
Rodeway Inn Maingate
Travelodge Anaheim at Disneyland Drive
Super 8 Anaheim Disneyland Drive

Are there any restrictions for purchasing an annual pass? If residency is a requirement, do they typically require some kind of proof such as a driver's license or utility bill? Are the rules the same for Disney World as well?

Great post! I've been getting the Last Day tickets from eBay for 5 years now and it has saved me hundreds and hundreds of dollars.

One quick warning though... my passes were confiscated the last time I tried to upgrade (Spring '09). YMMV and this may have been an isolated incident, but you should be aware that it is a possibility. They asked A LOT of questions about "my visit" (meaning the visit of the person who originally used the tickets). They asked: how many days I visited, what days, did I use my early entry, which day did I use it, who purchased the tickets, what park did I enter first, and maybe some more. I answered all of the questions confidently and correctly except for one (which day was the early entry). I was told by the manager on duty that they suspected I had purchased the ticket on eBay and was not the original purchaser and the tickets are non-transferrable. They said unless I could show a receipt of purchase for the tickets, they would be confiscated. I didn't have the receipt and, despite 15 minutes of polite arguing and pleading, they took my tickets. I could have stayed in the park for the day, but I went home in defeat.

As I said, I have done the upgrade successfully at least 5 times and this is the first I've heard of anything like this happening, but I just wanted it to be known.

Thanks again, OP, for the informative post!

Kunai said:Free at the hotel you're staying at.
Many hotels charge a 'resort fee' so, parking is not free, but you don't have much choice in the matter.

I'm a little nervous now...I just purchased tickets to upgrade but have no info on them. The cards do have the dates they were used written on top with pen (is this normal?) When you tried to upgrade, were you with family...kids in particular. I'm hoping they don't give me any problems...I have 4 kids ages 4, 6, 11, and 15 (which is hadicapped). I would break down and cry if they were to tell me that I couldn't upgrade!

I have a question about buying unused tix. I have been reading that disneyworld now has a fingerprint scanner and the fingerprints have to match. How are you guys overcoming this hurdle ?

I have also upgraded used tickets several times. In recent years, Disneyland has become more suspicious. Just go in knowing all of the facts (as bbaltim mentioned), be courteous, and you should be fine!

upgrading seems too risky. though prices just went up again, trying to find a way around blowing $1345 on tickets.

are there any discounts on APs. best deal now seems costco at 269.

craigslist seems to be void of ticket sellers, and many folks are selling counterfit tickets.

DEAL IS DEAD, costco no longer seller the annual pass , they just have the 4 day hopper for $160

I upgraded to my AP with my own 5 day disneyland ticket that I purchased from AAA and I got the 3rd degree from not only the cast memeber but also the supervisor. After correctly answering every question that they could ask he tried to question the fact that AAA in southern california does not sell tickets and he didnt believe that Las Vegas sells the tickets with parking included. But I did have my reciept from AAA to prove him wrong. I had an easier time getting my birthday fun card without any form of id since I had lost my id than I did trying to upgrade to my AP.