Iraq stunned South Korea 4-3 on penalties Wednesday and Saudi Arabia upset defending champions Japan 3-2 to set up an Asian Cup final few expected to see.

It is Iraq's first-ever major final and sparked wild celebrations in Baghdad, while the Saudis atoned for the last tournament in China in 2004 when they failed to make the decider for the first time in 20 years.

They meet in Jakarta on Sunday while Japan and South Korea face an unwanted trip to Pelambang in Indonesia on Saturday to play-off for third place.

Iraq's epic match went to a shootout after both sides failed to score in over two hours' of sustained committed football.

The decisive breakthrough came when goalkeeper Noor Sabri pushed Yeom Ki-hun's spot kick past the post and then Kim Jung-woo's shot hit the upright and bounced away.

Iraq are now just one match away from completing their greatest football achievement after they reached the semi-final of the 2004 Athens Olympics and the final of last year's Asian Games in Doha.

The victory sparked a barrage of gunfire in the Iraqi capital, as security forces, militant groups, insurgents and residents put aside their differences and fired skywards.

"This victory is for the people of Iraq because they deserve it," said Iraq's Brazilian coach Jorvan Vieira. "It also also for the boys because they worked very, very hard.

"Korea are a good team and I thought we neutralised them well. We were better than Korea on the fitness side. Is is a game that we will never forget."

It was desolation for the Koreans who have now failed to make the final since 1988.

"I am proud. We were not outplayed once in this tournament," insisted Korea's Dutch coach Pim Verbeek.

"We fought like hell. If people think that is not enough, then that's okay."

Iraq had the better scoring chances in an uninspiring first 45 minutes but it was largely Korea in the second period until they tired in extra-time.

The Iraqi were unlucky not to seal the victory then. Hawar Mohammed had a great chance when Haidar Abdul Amer's cross had the Korean defence in a dither and Hawar's shot hit the inside of the post and rolled along the goal-line.

In Hanoi, Saudi Arabia reached the final for the sixth time in seven tournaments with a smash-and-grab win over Japan.

The Saudis relied on their thrusting, rapier counter-attacks to mug the Japanese who dominated the ball without often threatening to turn possession into goals.

Livewire forward Malek Maaz netted a brace with strike partner Yasser Al Qahtani also scoring.

The opening goal came on 35 minutes. Adulrahman Al Qahtani won a free-kick and Taisir Al Jassam rose highest to meet his cross and the ball dropped kindly to Yasser Al Qahtani who needed no second invitation to rifle home.

That seemed to wake up the Japanese who were level just two minutes later through centre-back Yuji Nakazawa.

The second period was not allowed to settle into a pedestrian affair as the Saudis broke the deadlock two minutes after the restart.

Taisir Al Jassam released Ahmed Al Bahri down the right and his pinpoint cross was headed home by Maaz.

Once again it took a goal to awake the Japanese and they drew level again after another six minutes when Nachiro Takahara rose highest to head back Endo's corner for Yuki Abe to volley home.

On 57 minutes the Saudis went in front again through Maaz, who twisted and turned two defenders before finishing with the outside of his boot.