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hristine Sinclair scored a superb hat-trick as Canada lead three times.
But Megan Rapinoe scored direct from a corner and later with a fierce strike before Abby Wambach converted a penalty to make it 3-3.
And with a penalty shoot-out looming, the defending Olympic champions struck through Morgan's late header.
It was a classic game of football at Old Trafford, worthy of any occasion, and gives the US the chance to avenge their penalty shoot-out defeat by Japan in the final of the 2011 World Cup.
The US, three-times Olympic football gold medallists, tore into their near neighbours from the opening whistle and were soon creating chances, with Rhian Wilkinson blocking a strike from Carli Lloyd and Rapinoe shooting wide from long range.
It seemed as though a remarkable spell of play had drawn to a close but more was to come after Canada keeper Erin McLeod was penalised for holding the ball inside the area for more than six seconds.
An indirect free-kick was awarded, which Rapinoe eventually struck towards goal. It hit the arm of the unfortunate Sesselmann as she tried to block the ball and referee Christiana Pedersen awarded a spot kick that Wambach converted.
Wambach, whose penalty took her level with Sinclair on 143 international goals, should have snatched a late victory but could not quite slot home at the far post after stretching to reach Morgan's cross.
Both teams tired considerably during extra-time, but Wambach almost scored a decisive goal after 118 minutes only to see her header hit the crossbar before Morgan did snatch the most dramatic of victories for her team.
The US will now face Japan on Thursday at Wembley, hours after Canada play France in Coventry in the bronze medal match.