Kuwait defeated Iran 2-1 in the game, which was played at the King Abdullah Stadium in the Jordanian capital on Sunday night.
Kuwaiti striker Abdulaziz al-Enezi netted the opener in the 10th minute and Yousef al-Sulaiman doubled the lead for Kuwait a minute before the halftime break.
The Iranian footballers got one back five minutes into extra-time thanks to Milad Meydavoudi's header after Milad Zanidpour crossed to the penalty spot.
Iranian goalie Mehdi Rahmati was one of the few bright spots for the Iranian team.
Iran and Kuwait have played each other 35 times so far. The Iranians were victorious 16 times, Kuwait won 8 times, and 11 games ended in a tie.
The WAFF Championship final was one of the weakest performances of 2010 for the Iranian national team, which is warming up for a tough friendly against five-time World Cup champion Brazil on Thursday in Abu Dhabi, the United Arab Emirates.
The sixth edition of the WAFF championship kicked off on September 24 and ended on October 3.
Iran is also gearing up for the 2011 Asian Cup, which will be held in Qatar in January.
Iran's last championship in the Asian Cup came in 1976, when it hosted the event.
Iran is in Group D for the 2011 Asian Cup along with North Korea, the United Arab Emirates, and defending champions Iraq.