Craig Bellamy's goal sent Liverpool into the Carling Cup final after a 2-2 draw with Manchester City at Anfield earned a 3-2 aggregate victory.
The aggregate success means the Reds have ended a 16-year wait for a return to Wembley with Cardiff lying in wait for them on Sunday February 26.
Former City striker Bellamy was the hero for the team he rejoined in August, scoring the decisive goal 16 minutes from time.
The Wales international played a pivotal role throughout and will now face another former club - and city of his birth - Cardiff, as the Reds seek to end a trophy drought dating back to 2006.
Watching Liverpool owner John Henry will hope it is the start of a revival at the club he bought almost 18 months ago.
Roberto Mancini's City may have loftier ambitions as they currently top the Premier League but their approach to overturning a 1-0 first-leg deficit could have been more emphatic.
They scored twice at Anfield but they were far from at their devastating best and Liverpool created more chances and could have won by a more convincing margin.
However, had it not been for referee Phil Dowd generously awarding a penalty to allow Steven Gerrard to equalise late in the first half, the course of the match could have been different.
Nigel de Jong had put his side ahead on the night, and even after Gerrard's strike Edin Dzeko's goal looked like taking the second leg into extra time before Bellamy's intervention
Mancini's decision to start with three centre-backs - Joleon Lescott and Micah Richards either side of the nervy Stefan Savic, with top scorer Sergio Aguero dropped to the bench - looked over-cautious and Liverpool seized the initiative.
Aleksandar Kolarov almost gifted Jose Enrique an opener in the fourth minute from a sliced clearance back across goal but Joe Hart's outstretched foot block the left-back's shot and Stewart Downing screwed his follow-up volley wide.
Gerrard, tasked with a watching brief on David Silva, was booked for an early foul on Gareth Barry but it was the tackle of Charlie Adam on Dzeko from Silva's corner which could have done more damage to Liverpool but there were few City appeals for a penalty and Dowd was unmoved.
Bellamy was Liverpool's most threatening outlet and he drew another save out of Hart after turning Savic on the edge of the box before having a goal disallowed for offside.
The home side dominated the opening half-hour but they were hit with a career-best goal from De Jong.
Having collected a square pass from Silva 30 yards out the trajectory of his sweetly-struck shot started outside Jose Reina's left-hand post but curled back enough to brilliantly beat the goalkeeper.
De Jong goals are a rarity - it was only his second in 118 appearances - but there was far more familiarity about the goal which put Liverpool back in front on aggregate.
Dowd generously decided Daniel Agger's shot which deflected up off Richards and on to his arm was a penalty and Gerrard, scorer from the spot in the first encounter, fired home to make it four consecutive goals in league cup semi-finals, having scored in both legs against Watford in 2005.
Savic was replaced by Aguero for the second half as City reverted to a flat back four but Liverpool were first to threaten again as Gerrard whipped in a free-kick from the left and Hart half-punched only to redeem himself by tipping over Martin Skrtel's goalbound shot.
The England goalkeeper, as he had done in November's league draw at Anfield, superbly kept the Reds at bay again when he tipped over Downing's downward volley from Kuyt's cross.
Silva wasted a free-kick from the right after the Spaniard was booked for fouling Zabaleta but there could not have been a greater contrast with Kolarov's cross in the 67th minute.
The Russian drilled a low ball from wide on the left across Liverpool's six-yard box for Dzeko, who had lost Agger, to tap in at the far post.
Liverpool have a habit of producing fairytale finishes under the Anfield floodlights and so it proved.
Kuyt's pass in from the right to Bellamy was laid off to Glen Johnson who immediately bounced the ball back to the Welshman who curled home with his left foot.
Having effectively had his City career ended by Mancini after a fall-out with the Italian, it is unlikely the delicious irony was lost on the 32-year-old.
Kuyt headed wide Henderson's cross before Bellamy departed to a standing ovation, with even some among the City fans applauding his efforts.
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