Barcelona will play holders Manchester United in the Rome final on May 27 after a stunning reversal of fortunes at the very end of the semi-final second leg.
PHOTOS: Chelsea 1-1 Barcelona
Chelsea had been on their way to a second successive final against United thanks to a brilliant volley from Michael Essien in the ninth minute - similar to Zinedine Zidane's 2002 Champions League final goal against Bayer Leverkusen.
The Blues squandered several opportunities to net a killer second, and saw numerous penalty claims waved away by the officials.
Pep Guardiola's side had failed to muster a single shot on target until the third of four added minutes, as Iniesta fired home from the edge of the danger-zone.
Barcelona's Eric Abidal, who was sent off in the second half, will miss the final, as will Daniel Alves, who was booked on his birthday and will also be suspended.
However skipper Carles Puyol, who was suspended for this game, will be eligible for the final when United, who beat Chelsea in last year's final, will bid to become the first team in the Champions League era to retain the European Cup.
It is the second time coach Guus Hiddink has seen an injury-time away goal deny him an appearance in the Champions League final, after his PSV side were denied by a last-gasp Massimo Ambrosini header for AC Milan in the 2005 semi-final.
In certain circles Hiddink is known as “The semi-finalist,” having lost with Holland in 1998, Korea in 2002, PSV in 2005, Russia in 2008 and now Chelsea in 2009.
NEWS: Away goal heartache haunts Hiddink again
CHELSEA COMPLAINTS
Chelsea's players harangued Norwegian referee Tom Henning Ovrebo after the dramatic finale and Didier Drogba earned himself a booking after the final whistle.
The referee had turned down a number of penalty appeals from Chelsea but it seemed that his leniency was not going to trouble them as the match moved into stoppage time.
However Iniesta scored with Barcelona's first shot on target, one the underworked Chelsea goalkeeper Petr Cech could do little about.
Barcelona had plenty of possession throughout the opening half but produced very little in front of goal and rarely looked like adding to the almost-150 goals they have scored in all competitions this season.
Chelsea were far more dangerous on the counter-attack, and created most of what chances there were even after Essien's stunning goal.
That came about against the run of the early play when a shot from Frank Lampard hit Yaya Toure and fell for Essien to smash it in first time with his left foot from 22 metres.
For most of the first half Barcelona's attacks largely fizzled out with Lionel Messi virtually a spectator on the right wing.
In the one opportunity he had to cross after leaving Ashley Cole trailing in his wake, he passed harmlessly into the hands of the keeper.
Barcelona looked to be down and out when Abidal was s
