Kiryat Shmona, the outgoing league champions, needed extra time to knock out cup favourites Haifa 2-1 after Haifa went ahead through a 23rd minute-penalty by striker Dino Ndlovu.
Haifa were undone in the 71st minute by an east slot home by Ahmed Abed from a cross by Kiryat Shmona defender Shimon Abu Hatzeira.
Osei Mawuli scored Kiryat Shmona's winner in the 111th minute when he tapped in from close range after a free kick, silencing Haifa's fans who made up the bulk of the 26,000 crowd at the National Stadium in Tel Aviv.
Next month's final will be a first in the competition for Kiryat Shmona, last season's surprise league champions. For Haifa, one of the giants in Israeli soccer, the loss marked another disappointment since last winning the cup in 1998.
Hapoel Ramat Gan needed an injury-time winner to beat second-division Hapoel Rishon Lezion 2-1 in the earlier semi-final.