Out-half David Delaney proved the Shannon hero, landing the dramatic match-winning penalty goal in the first minute of injury time.
Garryowen, lying second, one place below Shannon in the All-Ireland League table, were good value for their one point 11-10 lead at the half-time break.
The light blues had a try from centre Ciaran O’Boyle and two penalty goals from Conor Kilroy.
Shannon hit back with a Padraig O’Brien try and a conversion and penalty goal from the boot of out-half Delaney.
The champions were in front within two minutes of the re-start when Delaney added his second penalty goal of the night.
Garryowen had a terrific opportunity to regain the lead in the 56th minute, but opted for a scrum rather than a kick at goal from in front of the posts.
The option back-fired, as Shannon forced a turnover before eventually clearing their lines.
However, Garryowen’s enterprising approach did pay off when Kilroy landed a terrific 77th-minute penalty goal to help his side regain the lead.
The Garryowen joy was short-lived however, with Delaney keeping his composure superbly to kick his side to victory late on.
Shannon will play the winners of today’s second semi-final between Dolphin and Cashel in his season’s Munster Senior Cup final.
: M Lawlor; D O’Donovan, B Tuohy, I Dowling, P O’Connor; D Delaney, C O’Loughlin; L Hogan, F Roche, T Buckley; D Keane, P O’Brien; D Ryan, E Halvey, S Keogh.
: F McNamara for C O’Loughlin (56 mins), A Meaney for D Keane (75 mins).
: A Finn; Cillian O’Boyle, Ciaran O’Boyle, K Hartigan, A O’Loughlin; C Kilroy, G Hurley; R Callaghan, P Humphries, F Pala’amo; F McKenna, D Sheehan; P Neville, A Kavanagh, M Melbourne.
: E Mackey for F McKenna (56 mins), D Varley for P Humphries (62 mins, R Brosnan for F Pala’amo, P Malone for D Sheehan (both 76 mins).
: G English (MAR).