The 36-year-old Swiss was made to work extremely hard by the man he breezed past in last year's Wimbledon final but managed to stretch every fibre of his being to keep his Australian Open crown with a 6-2 6-7 (5-7) 6-3 3-6 6-1 victory.
One local bookmaker says it has already paid out A$500,000 to punters who backed world number two Federer to retain the title he won in a thriller against Rafael Nadal past year.
Meanwhile, semi-final debutants Kyle Edmund, who lost to Cilic, and Chung hadn't really expected to get this far in the tournament and rode the wave for as much as possible.
Where will the Federer vs Cilic final be played? "Playing a grand slam over two weeks is tough for a 20-year-old to keep the concentration and keep the rhythm going".
When is the Australian Open final between Roger Federer and Marin Cilic?
Federer, who won the first set 6-1 and was leading 5-2 in the second when Chung retired hurt, was full of praise for his young opponent. In a field of 30 somethings who have dominated for so long, the tennis world gravitated towards the young German star as the only NextGen player who seemed destined for greatness.
Of course, confidence and a good run of form can only help you so much when you're taking on the greatest men's tennis player of all time.
Cilic set up two further break point chances at the start of the decider, but Federer weathered the storm.
Closing the roof may benefit Federer, given he is seven years Cilic's senior.
A victory for Federer in his 30th final at a major would continue an astonishing renaissance in which he and Nadal have reasserted their dominance over the men's field.
'I could tell something was wrong before he took the injury timeout, but he has a great composure, ' said Federer.
Instead, it was perhaps Cilic's nerves - and his wayward backhand - benefiting Federer the most early on. Only Novak Djokovic (3 times), Arnaud Clement, Alex Corretja and Rafael Nadal (all twice) have recorded multiple straight-sets wins against Federer at the majors.
"I definitely think him winning the U.S. Open, like Stan (Wawrinka) winning here a few years ago, it gave them great belief they can do it". "If the big moments come about, that they can attain this level".
Beating Federer would also make up for the disappointment of not being able to compete at his top form in the Wimbledon final, though Cilic isn't necessarily looking for redemption.
Literally speaking, he's closing the gap in the rankings, rising to a career-high of No. 3 next week, just behind Nadal and Federer, respectively.
"I was keeping the composure and I was just so relieved when everything was said and done and I think I felt the same way tonight and that's why I couldn't speak, it was awful". No stranger to adversity, Federer came back in the fifth set and found his serve to beat the inconsistent Cilic and secure his 20th Grand Slam.
And, this will be the second time the two will contest a Slam final.