Ipswich named a young but strong side that included former First Team players Jaime Peters, Matt Richards and Dean Bowditch who paired with hot prospect Connor Wickham up front.
With members of the First Team Manangement Team including Manager Jim Magilton and his Assistant John Gorman all in attendance, it was an ideal opportunity for the Town players to impress.
The Tractor Boys had the vast majority of the chances and controlled the game for long periods but failed to capitalise and were hit by a late sucker-punch.
Jaime Peters was the stand-out performer, his pace and trickery causing all sorts of problems for the Needham defence despite the less than smooth playing surface.
Dean Bowditch missed a golden opportunity in the 12th minute when he saw his penalty well saved by Needham 'keeper Liam Jones.
The second half saw Ipswich again on top; first Bermudan youngster Reggie Lambe rattled the crossbar from 25 yards just after the break and then substitute Ronan Murray had an effort cleared off the line by the outstanding Rhys Barber at the heart of the Needham backline.
Needham had started to come more into the game following the withdrawal of the classy Wickham and the decision to move Peters into a more central position, and striker Danny Phillips was starting to stretch the Town defence with his running.
In the 80th minute Bowditch showed great pace to break clear but his chipped effort from a tight angle drifted just past the far post.
With Extra-Time looming, former Ipswich Town midfielder Kevin Horlock saw his free kick cleared out to centre back Richard Butler who rifled a 25 yard strike low into the bottom corner to send the Needham fans into raptures!
Ipswich desperately pushed forward in search of an equaliser but it wasn't to be and Needham saw out the remaining minutes to book their date with Lowestoft Town in the LB Group Premier Cup Final on Tuesday 28th April at Portman Road.
Needham Market: Jones, Pemberton, Horlock, Parker, Butler, Barber, Boyland, Bexford (Bailey 89), Phillips (Dixon 72), Smy (Smith 63), Thrower. Unused subs: Dennnis, Sparkes.
Ipswich Town: McLoughlin, Hyam, Richards, Cawley (Daniels 57), Ainsley, Eastman, Peters, Upson, Wickham (Murray 57), Bowditch, Lambe. Unused subs: Ward, Clark, Watson.
Attendance: 345