In a cracking game at the Athletic Grounds, Johnny McGuckian’s early goal put Derry on top only for Shea O’Hare to respond swiftly for Tyrone.
But despite Ruairi McCullagh firing home Tyrone’s second goal, Derry restored parity at 1-6 to 2-3 before the break.
In a back-and-forth second half, Rory McGill edged Derry one point in front before Oisin Doherty’s free brought the teams level at 1-11 to 2-8 to ensure extra-time.
Ryan McNicholl’s goal in extra-time put Derry 2-13 to 2-9 ahead but Tyrone refused to give in and after Ruairi McHugh scored the Red Hands’ third goal, Conor Owens’ leveller sent the sides to the shoot-out where Tyrone held their nerve to get their hands back on the Corn Dhonaill Ui Mhurchu.