Cesare Prandelli's side overcame the odds thanks to a Balotelli double, which has seen him installed as the new favourite to finish topscorer ahead of Sunday's final
Germany were odds on favourites to book their place in the final but had no answer to the attacking threat posed by Balotelli and strike partner Antonio Cassano.
William Hill's enhanced price of 9/1 (10.0) on Balotelli scoring in an Italy win proved a fantastic opportunity for savvy punters and they were handsomely rewarded for putting their faith in Cesare Prandelli's side.
Despite a late rally in which Mesut Ozil slotted home an injury-time penalty, Germany could do nothing to overturn the two-goal deficit that had been inflicted by half-time, and Italy could have extended their lead further were it not for some wayward finishing once Balotelli had been substituted.
Balotelli's double, combined with the exit of joint topscorer Mario Gomez, has cut the Italian's odds of finishing with the Golden Boot award this summer and he is a best-priced 6/4 (2.50) with Sportingbet.
The Manchester City frontman is now the only player left in the competition with three goals to his name, while the Spanish trio of Fernando Torres (8/1) Cesc Fabregas (12/1) and Xabi Alonso (22/1) all remain in the hunt with two goals each.
Spain are 1/2 (1.50) favourites with Sportingbet to win the competition while Italy are available at 6/4 (2.50). The group game between the two sides finished in a 1-1 draw, so the final may be a closer contest than the odds suggest. A draw is available at 2/1 (3.0) with Sportingbet, although Italy have a relatively poor record against Spain, winning only one of their last seven meetings.
Vicente del Bosque's side are priced as 11/10 (2.10) to win the match in 90 minutes, with Italy priced as 14/5 (3.80) outsiders.
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Jim Knight is Betting Editor at Goal.com and has been tipping football games since he was old enough to place a bet. He is a Leicester City fan, writer and member of the We Are Going Up Podcast
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