The Saddlers suffered Birmingham FA Senior Cup semi-final heartbreak after conceding two late goals to lose at Leamington.
Amadou Bakayoko’s first-half strike appeared to have booked the visitors’ place in the final.
But Ahmed Obeng’s 87th-minute equaliser and Jack Edwards’ stoppage-time winner sealed a dramatic comeback.
Both teams entered the match full of confidence having each enjoyed strong league campaigns.
Leamington are currently second in the Southern League Premier Division, while the Saddlers’ Development Squad clinched the Central League North West Division title earlier this month.
And it was the visitors – also in the semi-finals of the Walsall Senior Cup - who could have taken an early lead when Cameron Peters raced onto a long ball before blazing over.
Peters threatened again on 21 minutes, the forward showing good perseverance to bundle his way into the box but his well-struck drive clipped the top of the bar.
Walsall had looked the more threatening and took the lead moments later.
Maz Kouhyar, continuing his rehabilitation from a knee injury, slid a piercing pass through to Bakayoko, who rounded Tony Breeden before calmly slotting into an empty net.
The Brakes ended the half strongly; Ben Kendrick cleared Kurtis Revan’s teasing low cross from virtually on the line and Robbie Thompson-Brown fizzed a long-range strike a whisker wide.
John Ward’s side then went close as Will Shorrock’s superb lofted pass picked out the run of Bakayoko but the onrushing Breeden made a smart stop to block the striker’s effort.
Opportunities proved in short supply at the start of the second half, with both sides restricted to efforts from long range.
The first real chance of the restart came on 70 minutes, Kouhyar curling a 25-yard strike narrowly wide of Breeden’s right-hand upright.
Only the woodwork denied Leamington a leveller moments later as Thompson-Brown’s rasping drive clattered the inside of the post following good hold-up play from Ahmed Obeng.
The hosts continued to push forward, with Jack Edwards shooting straight at Craig MacGillivray and Thompson-Brown being denied a tap-in by a miraculous goalline clearance.
And the pressure told three minutes from time as Obeng slammed home Revan’s inviting right-wing cross from close-range.
With the wind in their sails, Leamington grabbed a winner in the second minute of added time when another Revan delivery was turned home by Edwards.
Team: MacGillivray, Kendrick, Cockerill-Mollett, Sangha, Vann, Roberts, Kouhyar (Fisher 85’), Butterfield, Bakayoko, Peters (Hayles-Docherty 79’), Shorrock.
Subs not used: Ganley, Maddocks, Cela.