Sunderland U18 1-1 Villa U18: Young guns suffer shootout defeat
The boys in claret and blue took the lead in normal time through Jerell Sellars, who netted his seventh goal in three matches.
But the Black Cats hit back through Liam Agnew to take this play-off clash in to extra-time.
Tony McAndrew's team did well to hold on in normal time after seeing Brad Lewis sent off on the hour mark.
The extra time period produced no further goals, meaning penalties were required at the Academy of Light.
And it was the home side who emerged victorious with Martin Smith scoring the decisive spot-kick to give them a 3-2 success.