Al Ain will face the winner of the match-up between Real Madrid and Japan's Kashima Antlers
Al Ain stunned Copa Libertadores winners River Plate 5-4 on penalties on Tuesday after a lively 2-2 draw to clinch a place in the Club World Cup final and set up a potential showdown with Real Madrid in the United Arab Emirates.
Sweden international Marcus Berg flicked in a corner at the near post to give UAE champions Al Ain the lead on three minutes, but Rafael Santos Borre struck twice in quick succession to put River 2-1 ahead.
The Colombian forced in an equaliser from close range following a double save from Al Ain goalkeeper Khalid Eisa, and Santos Borre scored his second with a crisp finish from a Gonzalo Martinez assist.
Caio levelled for Al Ain on 51 minutes after a slick exchange with Japan defender Tsukasa Shiotani, before Atlanta United-bound Martinez slammed a penalty against the crossbar for River after Mohamed Ahmad brought down Milton Casco.
Al Ain converted all five of their spot-kicks in the shootout before Argentina midfielder Enzo Perez saw his effort saved by Eisa to send the hosts through to Saturday's final in Abu Dhabi.
"I hope not to be the Croatia of this World Cup because I hope to do better. They lost the final and I want to win it," said Al Ain's Croatian coach Zoran Mamic.
"Maybe it's something an Emirati must say. I've been in this country for a couple of years, but I think yes, that we are perhaps looking at the greatest success in football in this country. I'm proud to be part of this success. I hope the best is yet to come."
European champions Real, who are chasing a third successive Club World Cup crown, meet Asian champions Kashima Antlers of Japan in the second semi-final on Wednesday.
Earlier, African champions Esperance defeated Mexico's CD Guadalajara 6-5 on penalties to claim fifth place following a 1-1 draw in Al Ain.
Walter Sandoval converted an early penalty to give CONCACAF champions Guadalajara the lead, but Tunisian side Esperance levelled before half-time through a Mohammed Belaili spot-kick.