Australia's Stingers have defied all the odds to dethrone three-time defending women's water polo champions the USA in a dramatic penalty shootout and muscle themselves into the Olympic gold medal match in Paris.

Captain Zoe Arancini's side turned the tables on the world champs who had outplayed them in a three-match series in April, scoring a historic and nail-biting 14-13 triumph after a shootout on Friday morning at La Defense Arena.

The famous win means they're the first Australian women's side to reach the final since the class of 2000 won the inaugural event in Sydney.

And they're guaranteed their first medal since winning bronze in 2012.

In the final, they'll meet Spain who beat the Netherlands 19-18, also winning a penalty shootout after the sides had been locked 14-all in high-scoring regulation.

The Australians prevailed after the teams had tied 8-8 in regulation time and their hero proved to be goalkeeper Gabriella Palm, who made the crucial save in the shootout from Maddie Musselman, when the Aussies led 6-5 and were into the sudden-death period.

It prompted emotional, tearful scenes as the Stingers celebrated the triumph wildly in front of a packed 15,000-strong arena.

In regulation time, the Australians were on the back foot quickly when Musselman put the Americans ahead from a penalty after an Arancini foul, before Palm made a fine save to keep out another penalty from Jenna Flynn a minute later.

Flynn made amends to give the US a 2-0 lead with the American keeper Ashleigh Johnson pulling off early heroics, only to get beaten by Charlize Andrews's critical strike for the Aussies nine seconds before the end of the period.

A Musselman second-period goal was immediately answered by a terrific shot by Arancini, but the Americans then took a stranglehold, with Jovanna Sekulic and a killer breakaway goal from teenager Emily Mary Ausmus seven seconds before half-time giving them a 5-2 advantage.

It looked grim for Australia until Abby Andrews turned the game on its head with an amazing third period as she scored four times for the Stingers with her left-handed rockets. A game that had looked easy meat for the champions suddenly looked precarious as they went into the final period just 7-6 up.

The Americans stretched their lead but Bronte Halligan, daughter of NRL legend Daryl Halligan, came up big with two goals to make it 8-8 with three minutes left.

The Americans twice came close to winning it but after the near-misses amid a feverish atmosphere, it came down to penalties.

AAP