Anson Carter (New York Rangers) was the hero for Canada, scoring a controversial wrap-around goal 14 minutes into the 20-minute sudden death overtime period.
It's the first gold-medal victory for Canada at the World Championships since 1997. Led by head coach Andy Murray, the unheralded Canadian squad finished the tournament unbeaten in nine games (8-0-1).
"We worked really hard towards getting this team together," Carter told the Canadian Press. "We held team meetings away from the rink. We just tried hard to get to know each other and become a family.
Canada's hockey players celebrate after winning the gold medal at the World Hockey Championship in Helsinki, Finland, Sunday. Canada defeated Sweden in overtime 3-2 on a wrap-around goal by Anson Carter. (AP Photo/Martin Meissner)
"In order to win a championship you have to trust each other on and off the ice. And right now these guys are like my best friends."
After Carter appeared to score the winning goal, Canadian players poured onto the ice and began to celebrate. But the goal light did not turn on and the on-ice referee decided to go to the video replay.
Although several angles were inconclusive, one angle showed the puck crossing the goal line under the pad of goaltender Mikael Tellqvist. Following a lengthy review, the goal was awarded to Canada.
The lucky loonie legend from Canada's Olympic gold medal win last year was revived in the victory, as the Canadians had managed to plant a loonie under the crossbar of one of the goals. It just happened to be the net where Carter scored.
For Sweden, whose roster included superstars Peter Forsberg (Colorado Avalanche) and Mats Sundin (Toronto Maple Leafs), it was the second loss to Canada at this year's tournament.
The Swedes, winners of the bronze medal the last two years, were looking to win their first gold medal at the World Championships since 1998.
Canadian Sean Burke, who was injured in Friday's semifinal win against the Czech Republic, was named top goaltender of the tournament and 19-year-old Jay Bouwmeester was chosen best defenceman.
Sundin was selected as the tournament MVP and top forward.
Sunday's final featured plenty of fast-paced, end-to-end excitement.
After Canada fought back from a 2-0 deficit to tie the game in the third period, both teams had chances to seal the victory on breakaways in the final two minutes of regulation time.
For Sweden, Sundin broke in alone on Canadian goalie Roberto Luongo (Florida Panthers) and deked to the left but missed the open net on a backhand.
Moments later, Mike Comrie (Edmonton Oilers) had a breakaway for Canada and was stopped trying to shoot through the five-hole on Tellqvist.
Sweden responded, applying heavy pressure in the last minute of the third, but somehow Canada managed to hold on and send the game into the four-on-four, 20-minute overtime.
The talent-laden Swedes were strong early in the game using their speed and passing skills to dominate the Canadians.
Canada dodged a bullet eight minutes into the first period when Mattias Norstrom (Los Angeles Kings) fired a snapshot from the slot that hit the post behind goalie Luongo.
But a few minutes later Sweden's Daniel Tjarnqvist (Atlanta Thrashers) found the twine when he chopped in a rebound on a shot by Calder Trophy candidate Henrik Zetterberg (Detroit Red Wings).
P.J. Axelsson (Boston Bruins) increased Sweden's lead to 2-0 when he took a lead pass and streaked in on Luongo from the right wing. Axelsson wired a shot that Luongo got a piece of but not enough to keep the puck from fluttering into the net.
Canada fought back cutting the lead to 2-1 when Shawn Horcoff (Edmonton Oilers) picked up a loose puck on a rebound in front of the Swedish goal and flipped it past Tellqvist.
The game got a little chippy near the end of the second period as the Canadians began to turn up the heat around the Swedish net. Multiple penalties were handed out to both teams before the period ended with the score still 2-1.
Midway through the third, Horcoff was left alone behind the Swedish net and passed the puck to Shane Doan (Phoenix Coyotes). Despite being covered by Swedish defenceman Thomas Rhodin, Doan quickly snapped a shot that trickled through the pads of Tellqvist.
Twelve out of 25 players on Sweden's roster play in the NHL, whereas 22 out of 24 players on Team Canada's roster play in the NHL.
The crowd of 13,387 at Hartwall Arena was split evenly among Swedish fans wearing the Tre Kronor colours and local Finns who cheered for Canada.
with files from the Canadian Press