Mario Balotelli netted a first-half double to fire the Azzurri through, with Germany's goal coming from the penalty spot late on from Mesut Ozil.
Prandelli told Rai tv: "We have had a sensational match. It's a shame because we failed to score a third goal on two occasions in the second half."
The coach was particularly pleased with the heroics of Manchester City frontman Balotelli but hailed his entire team for a superb all-round display.
"He (Balotelli) was excellent, just like the entire team were," he added..
"I really believe that a team needs to have an idea in the way they play and he really subscribed to this playing style. He was high up the pitch and available and I think he put in a very good performance."
Watch: Balotelli double sets up Spain final.. More Videos
The Azzurri will now go up against holders and world champions Spain in Sunday's final in Kiev and while Vicente del Bosque's men are tipped to lift the trophy, Prandelli believes his side can match them.
The coach added: "For their experience and continuity they are the favourites, but we are there too."
Captain Philipp Lahm admitted Germany felt "very bitter" after exiting the tournament.
The full-back said: "It's very, very bitter. We made mistakes that led to those two goals. We worked hard in the first half and we had chances but you can't give up goals like that.
"Every defeat is bitter, especially after getting so far in the tournament. The most bitter part is that this team has so much potential for more than this, but we weren't clever enough."