Heavy rains created difficulties for the two sides who both missed chances on a slippery and waterlogged field.
After spending half-an-hour becoming familiar with the terrain, Huu Khoi opened the score for the host with a rapid attack. The striker took a pass from the right wing and tapped the ball through two Iranian defenders to beat goalkeeper Hossain.
The substitute goalie then had to work hard to resist Viet Nam's consecutive attacks. Nguyen Canh Duong nearly made it 2-0 for the host in the last minute of the first half but his straight shot was denied.
Iran equaled it in extra time when Jahan Khalil scored to the high corner of Vietnamese keeper Thanh Diep. It was Viet Nam's second goal loss in this tournament. The first was during their 2-1 victory over Qatar's U17 Aspire Academy in the group stage.
Coach Nguyen Quoc Tuan made changes for the second half, and his players were encouraged to attack more frequently in order to dominate their bigger rivals.
In his third attempt, midfielder Nguyen The Hung raised the score to 2-1 for Viet Nam from a beautiful shoot at the 59th minute. His 30m banana kick was difficult for Hossain, who had made the mistake of moving too far from his goal mouth. The Iranian could not get back in time to block the ball which came to his left corner.
The visitors then tried their best to find their second goal but failed to break a thick Vietnamese defence which held together to the end.
The host enjoyed a bonus of US$12,000 while Iran returned home with $7,000. In the third-place playoff earlier, Aspire Academy defeated Thailand 2-1 to win the bronze and $5,000. Organisers also presented bonuses for the tournament's best player, striker and goalkeeper.