The zippy 27-year-old winger, who earlier showed Manchester City fans what they can expect from their new signing with a fine performance off the bench, rifled his effort into the corner past Italy goalkeeper Gianluigi Buffon to win a nerve-shredding semi-final shootout 7-6.
The game, played in energy-sapping heat and humidity in Fortaleza, Brazil, had ended 0-0 after extra time and Navas was one of the few Spaniards who managed to cause the stubborn Italians problems with his pacy, weaving runs down the right.
The player has come a long way since he used to be frozen with panic when away from his Andalusian home.
"I was really confident in myself and in the team," he told FIFA.com. "At that moment, I didn't let anything cross my mind because I was so certain what the objective was.
"And, fortunately, I managed to achieve it. We were mentally strong and that's what made the difference."
A classic impact player who enters the fray late in the game when the opposition are tiring, it was Navas who picked up the ball deep in the Spain half near the end of the 2010 World Cup final against Netherlands.
His trademark burst of speed set in motion the move that culminated in Andres Iniesta's winning goal and he also netted against Croatia at Euro 2012 to send Spain through to the last eight as Group C winners.
His plucky penalty on Thursday drew praise from team mates Fernando Torres and Gerard Pique.
"The confidence he showed in taking that penalty matches the confidence we all had in him," Torres said.
"After everything that he's had to go through, he's gone on to become a player who's mentally very strong.
"I'm happy for him, he's an important part of this generation of players and I'm glad that he's the man of the hour."
Pique added: "It's an honour to have him in the team, because he's a player who always offers you something a bit different.
"Today he did just that thanks to his speed and his ability in one-on-one situations. He created a lot of chances for us."
Spain's opponents in Sunday's final at the Maracana, host nation Brazil, will have one more day to prepare after they knocked out South American champions Uruguay on Wednesday.
Spain coach Vicente del Bosque said he and his players would not use fatigue as an excuse if they failed to add the Confederations Cup to their trophy cabinet.
"It was decided by a draw and we are not going to say anything," he told a news conference.
"We have three days to recover as best we can," he added. "The players have responded perfectly to the demands of playing for the national team but on Sunday we want a little bit more."