Farhan Shakor struck in the 118th minute to seemingly put Iraq through, but with 15 seconds remaining Jung Hyuncheol saw Korea Republic come from behind for the third time to see the pair go to penalties for the second occasion in the space of a year.
Goals from Ali Faez and Shakor had put Iraq ahead twice in the first 90 minutes, but were cancelled out in turn by Kwon Changhoon and Lee Gwanghun. The game went down to penalties, just like their last meeting in the AFC U-19 Championship, though this time Iraq triumphed, with Shakor scoring the crucial spot-kick.
Iraq become the first Asian team to reach the FIFA U-20 World Cup semi-finals in 14 years and reach a FIFA semi-final for only the second time, following the Olympics in 2004. After their last meeting was ended from the penalty spot, it was maybe apt that this game got going in a similar manner. Hyun was penalised for hauling down Ali Adnan and Faez stepped up and slammed home the resulting penalty with 21 minutes gone.
The lead didn't last though and it's not one Iraq will want to see again. A long-throw from Sim Sangmin drifted into the centre of the area and, completely unmarked, Changhoon rose and headed into the bottom corner.
Iraq looked the most threatening though, with left-back Adnan almost scoring a stunning solo goal, skipping past three defenders to drive in to the Korea Republic are, but he dragged his shot wide. While Han Sunggyu's deflected shot caused a few Iraqi hearts to skip a beat, they were ahead before half-time.
An innovative volley by Ali Qasim, flicked with the outside of his right foot, forced Changguen into a full-length save, but Shakor was on hand to slot home the rebound and send the vocal Iraqi supporters into hysterics.
That good feeling was punctured swiftly though, with substitute Lee Gwanghun on target five minutes into the second period, nipping in at the front post to nod home from Changhoon's free-kick. It was another example of lax defending from dead-balls by Iraq, seeing them pegged back for the second time.
Changhoon had a great chance to score when he volleyed over from seven-yards, but clear-cut opportunities began to dry up as neither side wanted to allow their opponents back into the match, which saw extra-time arrive.
The Korean No10 fluffed another great chance in similar style, slicing his volley of the crossbar, as Korea Republic probed for the chance to take the lead for the first time. Lee Changmin was then involved at either end, clearing off the line before firing a vicious shot that forced Mohamed Hameed to tip over.
The game ended with one of the most stunning climaxes in FIFA U-20 World Cup history. Korea Republic looked dead and buried when Shakor struck with two minutes to go, but Hyuncheol's effort from 25 yards was deflected past Hameed to stun Iraq, who were sure they were through.
Having beaten Colombia 8-7 on penalties, Korea had recent experience on their side, and with Yeon Jeimin and Mohammed Jabbar Arebat missing it went to sudden death again. But when Gwanghun's effort was saved, Shakor was finally the hero as he slotted home the winner. They will now play Uruguay in the semi-final in Trabzon on Wednesday.