Arsenal's Alexis Sanchez slotted in the winning spot-kick after Argentina's Gonzalo Higuain fired over and Ever Banega was denied by Claudio Bravo.
Higuain had earlier missed from close range after 90 minutes of few chances.
Sanchez came closest in extra time for Chile, who scored all four of their penalties in the shootout.
Where Chile held their nerve, Argentina wilted in the shootout at the end of a performance that fell well short of the heights they reached in their 6-1 semi-final win over Paraguay.
Le Albiceleste are without a major trophy in the last 22 years since winning the 1993 Copa America in Ecuador.
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