In a repeat of the 2010 Sri Lanka final, Turkmenistan were found wanting from the penalty spot, blasting over late on only to see their more clinical opponents put away their own spot-kick seconds later to take the final 2-1.
"After conceding the first goal we still had enough time and we were dominating the game. I hoped our players would just do their best and score," said Korea DPR coach Yun Jong-Su. "I wasn't nervous about our penalty, I was confident we would score."
Turkmenistan had got off to a dream start, with striker Berdy Shamuradov slotting past Ri Myong-Guk after just two minutes, the first time the North Korean goalkeeper had conceded in the biennial tournament.
In a frenetic opening, favourites Korea DPR could have hit back twice after being denied a penalty shout which could have gone either way, and then hitting just wide from a free-kick 20 yards out moments later.
Korea DPR piled on the pressure and were rewarded when Jong Il-Gwan leapt to head a lofted cross low inside the post, to the delight of Kathmandu's Dashrath stadium, which holds 22,000.
Midfielder Pak Nam-Chol could have taken his team into the break in the lead after he was released just before half-time for a one-on-one with Turkmenistan keeper Rahmanberdi Alyhanov. But the 19-year-old fluffed his lines, blasting just over the bar.
Tale of two penalties
Korea DPR continued in the same vein after the restart, narrowly missing out on a number of scoring opportunities as their opponents spent large parts of the second period camped in their own half.
Turkmenistan continued to look dangerous on the break, however, stretching the North Koreans at every set-piece and hitting the bar with a stunning free-kick from the edge of the area by Turkmenistan player of the year Arslanmyrat Amanov.
The ever-industrious Amanov was tripped in the box on 81 minutes but captain Shamarudov blasted the penalty high over the bar and Korea DPR won their own penalty for a foul in the box straight from the goalkick. This time there was no mistake as substitute Jang Song-Hyok dispatched the ball low into the left-hand corner.
It was a repeat of Turkmenistan's heartbreak in Sri Lanka two years ago when they lost to Korea DPR in a penalty shoot-out after the teams were deadlocked at 1-1 after extra time. Korea DPR are now assured a place at the 2015 edition of the AFC Asian Cup, the region's blue riband football tournament, in Australia.