An own goal in second-half stoppage time from Laura Bassett broke English hearts as reigning champions Japan advanced to the Women's World Cup final.
Having had the better of the chances in the second half, England could not reach their maiden World Cup final, as Bassett's desperate attempt to intercept a cross from the right saw her lob her own goalkeeper and put the ball in off the crossbar - handing Japan a 2-1 victory.
England's players were distraught after the final whistle, with coach Mark Sampson seen consoling Bassett.
For Japan, the win means they will meet United States in the final on Sunday in a replay of the 2011 decider, which the Japanese won on penalties.
Japan started the match in a more spritely fashion but needed a somewhat dubious penalty to take the lead in the 32nd minute, with Claire Rafferty judged to have fouled Saori Ariyoshi in the box, although her push at least began outside the area.
Aya Miyama slotted her spot-kick inside Karen Bardsley's right-hand post but England were level just eight minutes later after another questionable penalty decision.
England captain Steph Houghton fell to the ground after a corner but any contact appeared minimal on replay, although that meant little as Fara Williams blasted her penalty past Ayumi Kaihori.
Sampson's side pressed cleverly after half-time, denying Japan space in midfield, which saw England produce three chances to take the lead in the space of four minutes just after the hour-mark, although they were unable to convert.
Toni Duggan hit the crossbar in the 62nd minute before substitute Ellen White forced Kaihori into a diving save, while Jill Scott failed to hit the target with a header when left unmarked at a corner with 24 minutes remaining.
Rafferty then looped a cross onto the top of the crossbar in the 78th minute, and England's missed chances would come back to haunt them.
