Declan Bonner’s side were well below their best but had a glorious opportunity to get out of jail in the third minute of stoppage time when substitute Kane Barrett was foot-blocked.
However, with virtually the last kick of the game, Conor Doherty skied the penalty over the crossbar.
Derry had been hammered by Donegal 4-18 to 3-6 in the group stages of the Ulster Minor Football League and then went down 2-14 to 1-11 in the final of the same competition in Omagh in April.
However, in Conor Glass, who kicked seven points and contributed much else aside, they had the outstanding player on the pitch on Saturday. After an indifferent start, the Oak Leaf County grabbed control of events to post a 0-7 to 0-3 interval lead.
While many predicted a Donegal onslaught at the start of the second half, it was Glass who scored the first two points to enable Derry to move six points clear.
Donegal clawed their way back into the contest gradually but only managed two points from play over the course of the hour.
Rory Carr, Doherty and Ethan O’Donnell’s dead ball kicking took them back to within touching distance and the late drama was almost enough to steal a final place against Cavan in three weeks time.
Derry, though, survived the late scare to book their tickets for a return in Clones as Donegal can only wonder what might have been.
D Rodgers; P McNern, S McMenamin, G McFadden; D Ó Baoill, S Ferry, B McCole; M Carroll; J McGee; E O’Donnell (0-3, 3 frees), N O’Donnell, N Ó Baoill; C Doherty (0-4, 2 frees, 0-1 pen), M Langan, R Carr (0-3, 1 free, ‘45’).
M Coyle for N O’Donnell (half-time); K Barrett for McCole (35); E McGettigan for N O’Baoill (53); P Doherty for Langan (55).
C Mullan-Young; N Keenan, C McGrogan, C Maunsell; O Duffin, M McEvoy, E Concannon; P Kearney (0-1), J Doherty; P Coney, S Downey, C Glass (0-7, 2 45s, 2 frees); T Flanagan, B Grant, S McGuigan (0-3, 1 free).
Fergal Higgins for Grant (37); Niall McAtamney for Duffin (53); Brian Cassidy for Kearney (53).
Sean Laverty (Antrim).