Argentina’s Maxi Rodriguez sunk the decisive penalty kick after Ron Vlaar and Wesley Sneijder were both saved in the shootout by ‘keeper Sergio Romero.
Argentina never looked back and having won advanced to play Germany in Rio de Janeiro for the World Cup itself on Sunday.
The Cup winner also earns $35 million, the beaten finalist – $25 million.
Netherlands face Brazil on Saturday in the third-place game worth bragging rights as well as $20 million to the winner and $18 to the loser.
Sunday’s final looks a classic encounter as Cup history shows Argentina beat Germany for the World Cup in 1986 and Germany snatching it right back in 1990.
After Tuesday’s blitz in which Germany starred in a 7-1 win over hosts Brazil, yesterday’s semifinal did not provide the same level of entertainment.
It was a largely shot-free game between two teams who appeared unwilling to really open the match up.
Netherlands did not get a single shot on target during regulation and there were few chances of note in the first half, with Jasper Cillessen making a routine save on a Lionel Messi free kick, and Vlaar being forced to play clean-up twice on Higuain.
In fact, the most notable moment of the half came after the ball was gone: Mascherano and Georginio Wijnaldum clashed heads, and had the Dutch midfielder not caught his counterpart, Mascherano would have fell face-first onto the turf.
As it was, he looked as if he was knocked unconscious, and the incident raised new questions about the care and treatment of soccer players who suffer head injuries in-game.
After the break, as the rain began to cascade down, the game slowed into more of a slog.
Higuain thought he had broken the game open with a stabbing move, knifing the ball at Cillessen off a Perez cross in the 75th, but the shot hit the side of the net and the flag was again up.
The call was dead wrong, but Higuain had fluffed what was perhaps the game’s best chance to that point.
With ten minutes to play, and the match deadlocked, the notoriously defensive Argentine coach Sabella threw the dice, putting on Rodrigo Palacio and Aguero.
It made little difference as the best chance fell to Robben in stoppage, only to see his shot deflected away by a sliding tackle from Mascherano.
In added time, it was the Dutch who looked the fresher, with Robben finally hitting the target with a dipping shot that was a comfortable save for Romero.
But chances were sparse: Palacio fluffed a fine chance with five to play in extra time when he weakly nodded a ball right into Cillessen’s gloves with Aguero open to his right; Messi set up sub Maxi Rodriguez well only to see a similarly poor volley right to the keeper.
And with that, the ref blew his whistle, and to the spot they went.
The result will add extra salt to Brazil’s wounds. Argentina are Brazil’s arch-rivals. They are in the final and the hosts are out.