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Germany have final laugh at the expense of the Kookaburras
The number-one ranked Kookaburras had no answer to Germany's precision passing game and ability to beat the press with aerials and confidence on the ball.
There were also echoes of Beijing where Australia lost a 2-0 lead to Spain at the same stage of the tournament.
In London, Germany so dominated the final stages of the game there was even time for a comic ending with Moritz Furste dribbling near the corner flag with one hand while rallying the Riverbank Arena crowd the other.
Things had, however, started well for the men in green and gold. Kieran Govers gave the Australians the lead in the 22nd minute, smashing in a rebound from a Glenn Turner shot. Germany equalised through a Furste corner, buried low to Nathan Burgers' right.
Australia took the lead in the second half with Turner this time putting away a rebound from a Simon Orchard shot after 42 minutes. Germany took eight minutes to equalise with Matthias Witthaus deceiving Burgers with an oddly slow, off balance slap. Timo Wess then flicked a corner home from a precision spin by Christopher Zeller.
And the coup de grace came in the 63rd minute with a length of the field breakout finished by Florian Fuchs sliding onto an Ben Wess cross.
Germany started their celebrations seconds early and charged over to keeper Max Weinhold who's corner saves from Govers and Chris Ciriello in the first half had been vital.
"I am really pleased with the performance. We showed super passion in a game full of fighting spirit which is what you expect in a semi final. But on top of that we also played some hockey," said Germany coach Markus Weise.
Australia coach Ric Charlesworth said hockey was a game of "small margins".
"When we play Germany it is 50-50 every time. They got the better of us at the end today. It is very disappointing for the players, for all of us. But you play sport knowing each time you play there is a winner and a loser and we fell short at the end today," Charlesworth said.
"We played Germany back into the game with a soft turnover in the field [for their second goal]. If you make errors against a Germany, you will get hurt," said the 60-year-old who coached Australia's women to gold in 1996 and 2000.