Atlas Lionesses goalkeeper Khadija Er-Rmici denied Ifeoma Onumonu in the second round of the shootout, allowing Rosella Ayane to stroke in the winning kick.
After having midfielder Halimatu Ayinde dismissed, Nigeria took the lead through an own goal from Yasmine Mrabet before Sanaa Mssoudy quickly equalised.
The defending champions then had forward Rasheedat Ajibade sent off with 19 minutes left, and a resolute defensive display saw the match go the distance.
It was one-way traffic in extra-time, but the North Africans could not find a way past Nigeria goalkeeper Chiamaka Nnadozie and Gift Monday almost won it for the Super Falcons when her fierce effort cannoned back off the crossbar.
But Morocco held their nerve in front of a packed stadium in Rabat to dump out the nine-time winners and ensure there will be a new name on the Wafcon trophy on Saturday.
Earlier on Monday, four-time Wafcon runners-up South Africa needed a contentious injury-time penalty to secure a 1-0 victory over Zambia.
Linda Motlhalo kept her cool to convert in the 94th minute after Martha Tembo was adjudged to have fouled Jermaine Seoposenwe.
Resilient Nigeria push Morocco to wire
Coached by former Lyon boss Reynald Pedros, Morocco had played slick football en route to the semi-finals but failed to find their rhythm in the first half against continental heavyweights Nigeria.
They were almost caught out by a short back-pass to Er-Rmici, but Ngozi Okobi-Okeoghene failed to capitalise as she shot wide.
Yet Morocco had looked like they would take control when Ayinde was sent off three minutes after the restart for a stamp on the heel of Ayane, a decision made after the intervention of the video assistant referee.
Osinachi Ohale headed off the line to deny Morocco captain Chizlane Chebbak and moments later Nigeria skipper Onome Ebi diverted a cross onto her own post before Ashleigh Plumptre scrambled the ball clear.
Yet it was Nigeria who took the lead through a freak goal, as a header from striker Onumonu rebounded off the post and an intended clearance rebounded in off Mrabet.
Morocco quickly levelled after the otherwise-solid Nnadozie spilled a cross and Nigeria were reduced to nine when the lively Ajibade had a yellow card upgraded to red – following another VAR check – for catching Zineb Redouani with her studs.
The hosts almost won it in normal time, but Fatima Tagnaout and Chebbak blasted narrowly off target and Nnadozie clawed away a low Mssoudy effort.
After a host of further chances in extra time, a partisan crowd of 45,562 in the Prince Moulay Abdellah Stadium – a record attendance for a game on the African continent – were relieved to be able to celebrate Morocco’s passage to the final.
Copper Queens denied by late VAR decision
There was VAR controversy in the earlier semi-final in Casablanca as the manner of Zambia’s exit frustrated coach Bruce Mwape and his Copper Queens squad.
There were no South African appeals when Seoposenwe went over in the 89th minute, and replays showed Tembo had blocked an attempted pass before the momentum of Banyana Banyana forward Seoposenwe took her into the Zambia defender.
Three minutes later, after checking her pitch-side monitor, Ethiopian referee Lidya Tafesse deemed the challenge was worthy of a penalty and Motlhalo netted her second goal of the tournament to put Desiree Ellis’ side through.
Zambia, without captain Barbra Banda because of gender eligibility issues, had lost first-choice keeper Hazel Nali after she failed a late fitness test.
Her replacement Musonda had little to do in the first half as Zambia head the better openings, with with Lubandji Ochumba bundling wide early on and Siomara Mapepa failing to get on the end of an inviting ball from Chanda.
South Africa, themselves missing star forward Thembi Kgatlana through injury, offered little and thought they had a penalty on the hour mark when Noxolo Cesane went down under the challenge of Lushomo Mweemba.
However, a VAR review showed the foul took place outside the box, and Seoposenwe fired her free-kick over the bar.
