Reigning champions Japan were knocked out of the 2015 AFC Asian Cup by United Arab Emirates after Europe-based stars Keisuke Honda and Shinji Kagawa missed spot kicks in a penalty shootout in Sydney on Friday night.

The UAE won 5-4 on penalties after the scores were level 1-1 after regulation and extra time.

Japan dominated possession and chances in extra time but couldn't find the opening against a stubborn UAE defence.

Substitute Ismail Ahmed took the decisive penalty for UAE after Honda blasted the first spot-kick over the bar and Kagawa's sixth effort hit the post.

UAE had taken a shock lead in the seventh minute when forward Ali Mabkhout scored his fourth goal of the tournament.

Japan had to wait until the 81st minute to equalise. AC Milan star Keisuke Honda provided the assist as substitute Gaku Shibasaki powered a right-footed shot into the back of the net.

UAE, who were Asian Cup finalists on home soil in 1996, will face host nation Australia in Tuesday's semifinal in Newcastle.

Earlier, a shootout was also needed as Iraq beat fierce rivals Iran 7-6 on penalties after a 3-3 draw in Canberra.