Troy Deeney thumped home the winner seconds after Leicester missed a penalty deep in added time as Watford sealed a Championship play-off final spot with an astonishing 3-1 win at Vicarage Road to secure a 3-2 aggregate victory over two frantic legs.
With the semi-final second leg seemingly destined for extra-time and Watford 2-1 ahead seven minutes into stoppage time, Leicester - 1-0 winners from Thursday's first leg at the King Power Stadium - were wrongly awarded a penalty as Antony Knockaert clearly dived under pressure from Marco Cassetti.
It was a wretched decision by the referee, but justice was done when the former Arsenal goalkeeper Manuel Almunia dived to his left to halt Knockaert's penalty, then pulled off a second desperate stop by throwing out an arm to stop the rebound as Knockaert pounced.
The Watford fans celebrated but the drama was not over as the home side dashed to the other end, and Leicester were quickly in trouble as goalkeeper Kasper Schmeichel missed Fernando Forestieri's cross.
Jonathan Hogg kept his cool to nod the ball back into the traffic for Deeney to wallop a ferocious volley into the vacant net from 12 yards out to secure Watford's place at Wembley against Brighton or Crystal Palace in a fortnight.
Some home fans raced onto the pitch as a look of disbelief governed the faces of the visiting players.
Matej Vyrda had netted two super goals (15, 65) for Watford with David Nugent heading home for the visiting side on 19 minutes - his second in two games - before the fun and games began deep into stoppage time.
While Watford celebrated amid some wild scenes with manager Gianfranco Zola, a disbelieving Knockaert was reduced to tears as he slumped to the ground - though considering how outrageous his dive had been to win the penalty, only the most diehard Leicester fan would ever claim that justice was not done.
There were just 20 seconds between Leicester's penalty miss and Watford's goal.
Watford could be back in the Premier League next season, but Nigel Pearson's Leicester can only reflect on what might have been.
Watford, who missed out on automatic promotion to Hull City on the final day of the regular season, had taken the lead after 15 minutes when striker Vydra fired home a brilliant angled volley.
But Leicester struck back four minutes later, Nugent heading in a corner from close range.
Watford created more obvious chances and were rewarded after 65 minutes when Czech Vydra exchanged passes with Deeney and finished calmly.
The match appeared to be heading for extra time before the dramatic finale and Deeney's goal which ended Leicester's hopes of returning to the top flight after an absence of nine years.
Brighton and Hove Albion host Crystal Palace in the second playoff semi-final on Monday. The first leg ended 0-0.
The final is at Wembley on May 27.
Champions Cardiff City and Hull won automatic promotion to the Premier League.
- Sports & Recreation
- Troy Deeney