Manuela Zanchi scored with two seconds left to give Italy a 6-5 upset victory in the semifinals over the world champion Americans.
The Italians advanced to the finals against Greece, a 6-2 winner over Australia, which will play the United States for the bronze.
"I'm very shocked," said American Brenda Villa, part of the silver medal squad four years ago. "I really thought we could hold them off.
"Our goal was the gold medal, but that's gone. We came here for a medal and we must finish that -- only now it's for bronze."
The United States led 4-2 after three periods. Then Italy rallied with two goals from Tania di Mario and another by Giusy Malato to move ahead 5-4.
Ellen Estes pulled the Americans even with 1 minute 11 seconds left, but the Italians finished stronger when Zanchi was left wide open to score from the left of the goal in the last seconds.
U.S. Coach Guy Baker was seething about a refereeing call in the last minute, when the Americans were penalized for an offensive foul. He didn't comment on the decision, but said the result was devastating for his team.
"It's the Olympics. I think you should be really excited when it's all over, or you should be crushed -- we're crushed," he said. "We've invested a lot in this and we thought we had a great opportunity."
-- From News Services