Goals from Jozy Altidore and Clint Dempsey ended Spain's world record run of 15 successive victories and their 35-match unbeaten sequence, a world record streak they share with Brazil, and caused one of the biggest soccer upsets in years.
However, the match ended in bitter-sweet agony for U.S. coach Bob Bradley when his son Michael, who had a brilliant game in midfield, was sent off three minutes from time.
He was the third U.S. player sent off in the tournament and now misses Sunday's final against Brazil or hosts South Africa.
Overall though it was the best performance by the U.S. since they beat England 1-0 in the 1950 World Cup in Brazil.
It was also the first time the U.S. had beaten a team ranked number one in FIFA's world rankings since they defeated Brazil in 1998.
The result was even more remarkable because the U.S. had lost their opening two group matches in the competition and were heading out until they beat Egypt 3-0 on Sunday and Brazil sank Italy by the same score as they squeezed through on the number of goals scored.
The fact the Americans are now in the final is testimony to their grit, determination and battling qualities in denying Spain time and space in midfield and up front.
Typical were brave blocks by defenders Jay DeMerit, Oguchi Onyewu and Carlos Bocanegra who were all outstanding.
GREAT EFFORT
"That was a great team effort, to beat a team like Spain, it's big," coach Bradley told reporters.
"We played as hard as we could, everyone played their part. We will take a few hours to regroup now but we will be ready for the final. We are so excited about this."
Counterpart Vicente Del Bosque, who had guided his side to 13 wins in a row since taking over after Spain won Euro 2008, said: "We are not used to losing any longer.
"Every defeat hurts. Today we needed the final touch. We had many opportunities but they really closed the door on us."
Altidore, 19, said: "The fact I play my football in Spain at Villarreal was a big help. I have played against a lot of these guys and know them and gave the coach some information.
"I sent some of them texts before the game telling them we were going to win. I was right. But everything went for us tonight, it was our night."
Both sets of players left the field in tears, the Americans crying with joy and the Spaniards frustrated after being thwarted by a superb defensive effort and the outstanding Tim Howard, who made an endless string of stunning saves.
Spain fell behind for the first time in the tournament through Altidore.
He muscled Villarreal club mate Joan Capdevila off the ball, turned and eluded Carles Puyol to score after Iker Casillas could only palm his shot on to the inside of his own post and into the net after 27 minutes.
The second goal came in the 74th when Sergio Ramos failed to clear a cross from Landon Donovan and Dempsey swivelled to beat Casillas from close range.
