A rapid three-goal burst from MK Dons gave them a narrow lead and denied Sir Alex Ferguson a double celebration.
The Manchester United boss celebrated his 12th Premier League title on Saturday and was present to watch son Darren attempt to guide Posh toward a third promotion under his command.
The Fergusons were all smiles at half time as Posh led through striker Craig Mackail-Smith's 35th goal of the season but saw United fall apart in a calamitous spell after the break.
England Under-21 international goalkeeper Joe Lewis came off through injury during the interval and replacement Paul Jones was beaten three times in the opening 11 minutes as Daniel Powell, Sam Baldock and Angelo Balanta seemingly put Karl Robinson's side in charge.
Full-back Charlie Lee was then sent off to cap a miserable period but captain Grant McCann then scored from the spot to give Posh every chance of booking a place in the final at Old Trafford.
Dons midfielder Stephen Gleeson was also dismissed in the penalty incident as both sides finished with 10 men in a cracking game.
Dons looked bright in the opening moments but it was Ferguson's men who took the lead with their first real attack in the eighth minute as they scored their 107th league goal of the season.
Mark Little surged into the penalty area down the right and cut the ball back for Nathaniel Mendez-Laing, who was lurking on the penalty spot.
His low shot was saved by David Martin but the keeper could only parry the ball out to Mackail-Smith, who converted from six yards.
Ferguson had to replace centre-half Gabriel Zakuani through a shoulder injury on the half hour mark and Lewis pulled off a great save to keep out a Mathias Doumbe header as the half drew to a close.
Lewis had taken a knock early on and failed to reappear for the second period so Jones came on in goal and was beaten instantly as the home side levelled in the 47th minute.
Dons captain Dean Lewington floated in a deep cross from the left which Tommy Rowe made a mess of clearing.
Jones tried to punch the ball clear but succeeded only in slapping it down to Powell, who smashed in from close range.
The equaliser was well deserved and Robinson's side were in front just three minutes later through Baldock.
There appeared little danger when the striker lined up a free-kick 30 yards from goal but he fired in a low shot under the wall which flew past Jones and into the corner. A remarkable turnaround was complete in the 56th minute when Balanta cracked in a third.
The on-loan QPR youngster was left free at the far post from a Lewington free-kick and after wasting his first header showed great composure when handed a second chance.
He collected a Luke Chadwick pass, slipped inside a challenge on the left of the area and drove powerfully past a shell shocked Jones at his near post.
Posh's challenge suffered another blow in the 67th minute when left-back Lee was shown his second yellow card by referee Jon Moss for a foul on Powell.
Baldock could have killed the tie but dragged his shot wide before Posh were handed a penalty in the 81st minute.
Little broke from his own half and after flying into the area was tripped by Gleeson.
He was harshly shown a straight red card and McCann made no mistake from the spot-kick to set up an enthralling second leg at London Road on Thursday night.