Uruguay scored the equalizer in the 87th minute to draw with Iraq 1-1 and won the penalty shootout 7-6 to reach the final of the Under-20 World Cup on Wednesday.
Runner-up in 1997, Uruguay will play first-time finalist France on Saturday. The Europeans beat Ghana 2-1 in the first semifinal.
Iraq midfielder Saif Salman sent the decisive spot-kick over the crossbar after both teams missed one penalty. Gianni Rodriguez had Uruguay's first attempt saved by Iraq goalkeeper Mohammed Hameed and Ali Faez also missed the first for Iraq as he hit the post.
Uruguay substitute Gonzalo Bueno levelled the score with a volley in the closing minutes of regulation after Iraq took the lead in the first half on a free kick by Ali Adnan.
Iraq missed the chance to reach the final of a FIFA tournament for the first time.
Iraq's successful run to the semifinal has been warmly welcomed at home. Streets and cafes in Baghdad and other cities were the scene of jubilant celebrations after the wins over Paraguay and South Korea, but the streets remained calm on Wednesday.
Iraq also drew a lot of Turkish fans, who switched allegiance after the host team lost in the first knockout round.
Striker Florian Thauvin scored both goals for France against Ghana. Two minutes before halftime, Thauvin was set up by Jean Christophe Bahebeck, dribbled past Ghana goalkeeper Eric Antwi and netted into the empty goal.
Ebenezer Assifuah equalized for Ghana in the 47th with his fifth goal of the tournament as he collected the ball with his back to the goal, and held off three defenders before directing a 20-meter strike past goalkeeper Alphonse Areola.
Thauvin found the net again coming in from the right and beat Antwi with a low shot at the near post in the 74th.
France defender Samuel Umtiti was sent off for receiving a second booking in the 80th and will miss the final.
France, improving on its best result of fourth two years ago, can become the first European winner since Spain in 1999, which has been the sole European victory in the competition for the past 20 years.