The Lionesses dream of reaching their first Women's World Cup final have been dashed after an own goal during injury time handed Japan a 2-1 win.
England's Laura Bassett scored the own goal in the 92nd minute of the semi-final match at the Commonwealth Stadium in Edmonton, Alberta, Canada.
The teams had been set for extra-time after sharing two controversial first half penalties - Aya Miyama's 33rd minute spot-kick being cancelled out by Fara Williams' penalty seven minutes later.
Mark Sampson's Lionesses went close to scoring a second several times in the second half, with Toni Duggan and Claire Rafferty hitting the crossbar while Ellen White and Jill Scott also had good chances.
But in stoppage time the impressive Bassett's interception from Nahomi Kawasumi's cross looped the ball past helpless keeper Karen Bardsley and in off the bar
Japan will now face the the USA on Sunday in a repeat of the 2011 final, while England will face Germany in a third place play-off in Edmonton on Saturday.
England started the match brightly, with Jodie Taylor's touch on and shot in the first minute bouncing just wide of Ayumi Kaihori's goal with the Japanese keeper scrambling.
Aya Sameshima fired over from 25 yards at the other end and fit-again Bardsley then fumbled a free-kick unconvincingly over the bar and was relieved to see an offside flag against Yuki Ogimi.
Duggan's snap-shot for England cleared the bar and the Manchester City player then volleyed high over.
Japan took the lead in the 33rd minute when Rafferty pushed over Saori Ariyoshi and a penalty was awarded, though the foul appeared to be outside the area. Miyama sent Bardsley the wrong way from the spot.
Rafferty, trying to make amends, shot wide but England had a penalty of their own when Steph Houghton was caught by Ogimi. Williams emphatically converted, beating Kaihori's dive.
In the second half Bardsley denied Shinobu Ohno while Lucy Bronze, the full-back seeking her third goal in successive games, headed over from an England set-piece.
White, who scored in the 2011 World Cup meeting between these sides won by England, then replaced Taylor up front for the Lionesses.
Duggan crashed a superb right-foot effort against the crossbar and Kaihori had to dive to her right to save White's left-foot curler from 20 yards.
Scott headed inches wide from Williams' corner but England's spell of dominance failed to yield a goal.
Japanese substitute Mana Iwabuchi, on for Ohno, cut inside and shot wide. Bronze then succumbed to cramp and was replaced by Alex Scott, while Bardsley also received treatment on her left ankle.
Mizuho Sakaguchi headed Mayama's cross wide while at the other end, Rafferty's cross deceived Kaihori and clunked off the top of the crossbar.
England coach Mark Sampson sent on Karen Carney in the closing stages, with Williams making way.
Houghton's long free-kick was not dealt with properly by Kaihori but the loose ball would not fall to White - and there was then the last-gasp heartbreak for England at the other end.