Darren Young fired Dunfermline into the CIS Insurance Cup final after grabbing the only goal of the game against Livingston.
The Pars star kept his cool to convert from the penalty spot, after Mark Burchill had been fouled in the box by Greg Strong.
The win sets up a meeting with either Celtic or Motherwell in the final at Hampden on March 19.
Dunfermline and Livingston had endured equally disappointing Bank of Scotland Premier League campaigns so far, with only a point separating both clubs at the bottom of the table.
They had also suffered embarrassing defeats to lower division clubs in the Tennent's Scottish Cup, Dunfermline losing to Airdrie and Livingston to Alloa.
But, against all the odds, the CIS Insurance Cup had provided hope of reaching a major final this season.
Livingston had already been there, winning the trophy two years ago, just as the club were being plunged into administration.
But it was Dunfermline who looked the hungrier team from the outset, Young testing the resolve of Livi goalkeeper Roddy McKenzie after just a few minutes only to see his opportunistic drive smothered.
He had the opportunity to atone when Mark Burchill - a constant menace for the Pars - whipped a dangerous ball across goal, which was crying out to be prodded home, but he just failed to connect.
Chances for Livingston had been few and far between but Paul Dalglish showed shades of dad Kenny when his thunderous effort drew an impressive save from Pars goalkeeper Allan McGregor.
Dunfermline were unfortunate not to take the lead through Burchill when he was first denied by Harald Pinxten, before seeing his rebound touched wide by the goalkeeper.
Richard Brittain then did well to snatch the ball from the feet of Noel Hunt after Burchill had set him up for the shot.
The breakthrough came after 36 minutes when Burchill was hauled down in the box by Greg Strong and referee Dougie McDonald immediately pointed to the penalty spot.
It was Young who stepped up for the pressure kick and he kept his cool to blast high into the back of the net.
Livingston made the first change of the game shortly after the restart when Gabor Vincze - who netted their only goal against Rangers at the weekend - was replaced by former Par Jason Dair.
With just one goal in it, Dunfermline knew they had to pile on the pressure after the break but they were struggling to dismantle the Livi defence.
Simon Donnelly pounced on a stray pass from Dair and should have made more of the opportunity to burst into enemy territory but he was too easily dispossessed by the Livingston defenders.
Burchill then won a free-kick on the edge of the box after being brought down by Pinxten but Donnelly curled the set-piece just over the crossbar.
Hunt was forced to withdraw with what appeared to be cramp and was replaced by Bartosz Tarachulski, while Livi threw on youngster Allan Walker in place of David McNamee for the last 15 minutes.
Livingston were desperate to haul themselves back into the tie and Robert Snodgrass threw himself down in the box under pressure from Greg Shields but the referee was unimpressed.
A late free-kick was then squandered by Wes Hoolahan, who sent the ball sailing harmlessly over all the heads in the box and out of play, as Dunfermline held on for the win.
Teams:
Dunfermline McGregor, McCunnie, Shields, Scott Wilson,Zambernardi, Craig Wilson (Ross 87), Mason, Darren Young,Donnelly, Burchill (Labonte 83), Hunt (Tarachulski 70).
Subs Not Used: Halliwell, Thomson.
Goals: Darren Young 37 pen.
Livingston McKenzie, McNamee (Walker 76), Pinxten, Strong,Mackay, Brittain, Vincze (Dair 53), Tierney, Hoolahan,Hislop (Snodgrass 64), Dalglish.
Subs Not Used: Roy, Dorado.
Booked: Pinxten.
Att: 4,630
Ref: Dougie McDonald (Scotland).