Talented goalkeeper Bui Tien Dung denied a kick from Iraqi side while all five Vietnamese players were successful with their finishes in the quarter-finals seesaw match - the only one happening in extra time and then penalties.
Earlier, in the official 90 minutes and nervous extra time, Vietnam drew 3-3 with the Asian powerhouse.
Iraq, the last championship’s bronze medalist, levelled the result with a penalty by striker Ayman Hussein some minutes later.
"It is the best match of Vietnam in this tournament so far. They played at their best with the never-give-up spirit. We must praise all of them, the true warriors," said football expat Trinh Minh Hue in a TV commentary show.