The 21-year-old Manchester City star broke German hearts with a first-half header and sublime strike as Joachim Loew's inexperienced team -- the youngest of the 16 at Euro 2012 -- failed to cope with Cesare Prandelli's street-wise Italians.
A late penalty from Mesut Ozil proved no more than a consolation score for the Germans whose 16-year wait for a major title continues.
Italy are now into Sunday's final in Kiev to face defending champions Spain with the Italians bidding to win their first European crown since 1968.
Victory at Warsaw's National Stadium means Italy maintain their impressive record of having never lost to Germany at a World Cup or European Championships on their eighth meeting at a major tournament.
Having dropped three of his forwards for last Friday's 4-2 quarter-final win over Greece, Loew again tinkered with his starting line-up, but this time it back-fired as the Germans lacked an effective Plan B when things went wrong.
Arsenal-bound Lukas Podolski was hauled off at half-time, striker Mario Gomez also made way for 34-year-old veteran Miroslav Klose after the break, while Toni Kroos barely troubled the Italian defence from the right wing.
Germany had a couple of golden chances early on, but the Azzurri soon asserted themselves and after Riccardo Montolivo tested Germany goalkeeper Manuel Neuer, Italy took the lead on 20 minutes.
Antonio Cassano ghosted through two German defenders and crossed for Balotelli to beat his marker Holger Badstuber and slam his header past Neuer.
It was the first time since the Euro 2008 final Germany had fallen behind in a European Championship match after their ten wins in qualifying and their four wins so far at Euro 2012.
The perplexed looks in the German ranks told their own tale.
Rattled, the Germans tried to reassert themselves with Mesut Ozil and Gomez both squandering half chances, but Italy captain Gianluigi Buffon stood up to the challenge in goal before the Azzurri struck again.
A sublime pass from Fiorentina's Montolivo split the German defence and gave Balotelli all the space he needed to curl his shot past Neuer on 36 minutes.
With the Germans now reeling, Reus was quickly into the action after replacing Podolski and tested Buffon with a well-struck free-kick with an hour gone.
But the Italians were not to be denied their first European final since their Euro 2000 defeat to France when Claudio Marchisio fired wide on 67 minutes and again eight minutes later.
Balotelli made way for Antonio Di Natale on 70 minutes and with time running out, the Udinese forward missed a golden chance with the German defence all at sea.
A handball by Federico Balzaretti in the 92nd minute gave Germany brief hope as referee Stephane Lannoy pointed to the spot and Ozil blasted home the spot-kick, but it was too little, too late.
The Azzurri can now dream of denying world and European champions Spain a third consecutive major title on Sunday.
View a slideshow of the match here.
COMMENTS (13)
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No but Germany have one 3 world cups!! Italy is very strong!! Their defenders are too good and they have the 2nd best goal keeper in the world so they have many advantages also. Germany have Lahm, Hummels, Boateng and Mertesacker. Amazing Defenders.. Gomez and Klose.. Ozil and Schweinsteiger. Italy vs Spain!!!!! Amazing final on SUNDAY!!
@GhostRider: I share your feeling. have stopped following cricket 6-7 years ago. Now I'm all for La Liga and EPL(BPL)
@Nafasat Khan: Point taken....didn't know that :)
Indeed it is plagiarism!!!!
@Aka: Dude i got sentimental...i just cant stand a beautiful and universal game like football be compared to a complete waste of time like cricket... chill :p
@GhostRider: im comparing??no im jus teling u dt in cricket s.africa hv number of quality and class players even though they r unable 2 win big tournament..same applys 2 germany..they reach final or semis bt unable 2 win..
@HH: it is'nt Plagiarism, cuz its a news relased by a news agengy "AFP" so any site or newspaper taking news from this particular agency will be same.
Love you Balotelli... No matter how many stars were in the german side, you alone was enough for them especially the second goal was an absolute stunner!!!
ET, isn't it Plagiarism ??? The same article appears elsewhere as well. See: - http://www.vanguardngr.com/2012/06/euro-2012-balotelli-takes-germany-to-final/ - http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=333093
@GhostRider: Aka is not comparing football with cricket. the analogy was simply between the "fates" of two teams.. Otherwise, I know it's a sin to compare the beautiful game of football to a lame and boring game of cricket...
@Aka: Please dont compare football with cricket... analogy between SA and germany sound pretty lame
watch euro final live at http://www.livesports300.co.cc
Germany is a chokers like south africa in cricket....in recent times they r unable 2 won major tournament even when they hv best playrs in squad.