Ahmed Yasin equalised for Iraq after Sardar Azmoun had given Iran a first-half lead, and the sides were forced to a penalty shootout when a frantic additional 30 minutes saw the match end 3-3.
Iran's Vahid Amiri missed his spot-kick with the teams tied at 6-6 on penalties, before Salam Shakir netted the winner.
"The Iranian players did everything possible to turn the game our way," said Queiroz. "I am very proud of the way they played the game and the way they fought.
"We go home now and it hurts a lot because the players worked hard and committed themselves, they deserve something more and they deserve respect from the fans.
"They have all my love and all my support because of the way they fought for the whole 120 minutes and penalties, and I feel very, very proud to be coach of this team and these players."
And Queiroz was quick to wish Iraq luck for the rest of the tournament, adding: "Congratulations to the Iraq team for qualifying for the semi-finals.
"The Iraqi players deserve all respect and consideration from Iranian fans.
"I wish Iraq the best of luck for the next game against South Korea, they played a good game and I hope they have success in their next match."
