Down came back from nine points in arrears to win Saturday's All-Ireland U20B semi-final at Owenbeg, 2-17 to 0-22.
The Oakleafers were the driving seat and led 0-13 to 1-5 ahead at the break, with Ronan Costello finding the net for Down before half-time.
Conor McCrickard hit Down's second goal in the 46th minute but it still looked the home side's game to lose.
The visitors, who game into the game with wins over Donegal and Sligo, finished the stronger side.
Tim Prenter levelled the game in the 60th minute before Eoghan Cassidy put Derry back in front.
But the momentum was with Down and Niall Fitzsimmons' point but them ahead for the first time in the game to grab victory in stoppage time.
Down play holders Kerry in the final on the weekend of August 3-5 after the Kingdom defeated Meath 2-21 to 1-19 in the other semi-final.
"This is a terrific competition, if it is done right," commented Derry coach Kevin Kelly after the game. "It looks bad when teams are pulling out of it and don't fulfil their fixtures...that's not Derry or Down's fault."
Down: Conor McLornan; Eoin Kelly, Tom Murray, Aaron Dorian; Callum Smith, Ruairi McCrickard, Niall McFarlane (0-1); Niall Fitzsimons (0-1), Phelim Savage; Joe Hannrahan, Ronan Blair (0-3, 1f), Tim Prenter (0-1); Stuart Martin (0-4), Conor McCrickard (1-5, 2f), Ronan Costello (1-2).
Subs: Matt McAreavey for E Kelly (24), Ciaran Watson for J Hannrahan (39), Michael McKay for C Smyth (43), Padraig Doran for R Blair (44).
Derry: Eoin Mulholland; Marty Bradley, Michael McEldowney, Pádraig O'Kane; Daire Kelly, Tiarnan Walsh, Fintan Bradley (0-1); Richie Mullan (0-7, 2f), Noel Rafferty; Eoghan Cassidy (0-4), Sean Kelly (0-2), Eoghan O'Kane (0-4); Ryan Scullion (0-1), Tiarnán McHugh (0-2), Reece McSorley (0-1).
Subs: James Crawford for N Rafferty (51), Shane Grant for R McSorley (55), Fintan McGrath for D Kelly (60+2), Tim Rankin for R Scullion (60+2).
Ref: Aidan Ferguson (Fermanagh).
Pic: Mary K Burke.
For full coverage from the game, grab a copy of Monday's Derry News or Tuesday's County Derry Post
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