In what was truly a game of two halves during the first 90 minutes, Rob Edwards's men deservedly broke the deadlock through Jordan Clark, but the Sky Blues were a side reborn after the break and restored parity through Gustavo Hamer.
Following a disallowed Joe Taylor goal in extra time, and the destiny of both sides would be decided from 12 yards, where after 11 perfect penalties Fankaty Dabo blazed his spot kick over the bar to ensure that Kenilworth Road would be hosting Premier League fixtures in 2023-24.
With the sunshine beaming down on Ethan Horvath's goal, the Luton shot-stopper was catching rays and not much else during a relentless opening from the Hatters, who had the ball in the back of the net within just five minutes.
Tom Lockyer sparked a goalmouth scramble by winning the first header from a corner, and Gabriel Osho was on hand to poke the ball over the line, but the 24-year-old had just strayed offside.
However, just three minutes after setting up that chance, Lockyer worryingly went down off the ball with nobody near him, and there was serious concern for the defender's welfare as medical staff attended to him.
Following a lengthy delay, Lockyer was stretchered off the field as Reece Burke replaced him, but Luton immediately regrouped in the wake of those distressing scenes and did not allow Coventry a moment to breathe.
The Hatters' long balls over the top had Coventry at sixes and sevens at the back, and one such chance arose from Kyle McFadzean heading a route-one pass up into the air in the 14th minute, but Carlton Morris's attempt at a bicycle kick trickled just wide.
The Sky Blues had not learned their lessons, though, and with 23 minutes gone, Elijah Adebayo met another long pass, twisted McFadzean inside and out on the left before cutting back for the advancing Clark to fire home at Ben Wilson's near post.
Showing no signs of a revival, Coventry remained extremely vulnerable to Luton's aerial threat and should have been 2-0 down with 29 minutes gone, but Adebayo side-footed an effort just wide from the centre of the box.
Alfie Doughty was also proving a menace to deal with on the left flank, and with 41 minutes gone, the 23-year-old was very nearly the catalyst for Luton's insurance goal, as McFadzean got in the way of his low strike but only seemed to take the pace off the shot on its way in.
Wilson was also beaten, and Callum Doyle's goal-line clearance hit Adebayo before ending up in the back of the net, but the ball had clearly struck the Luton man's hand and the goal was swiftly chalked off.
Certainly fortunate to only be 1-0 down in the dying embers of the first half, Coventry suddenly came alive and had a gilt-edged chance in the 43rd minute when Horvath came for a Jake Bidwell cross and missed, but the delivery was an awkward height for Hamer, who could only send a half-volley over the bar.
The Sky Blues continued to ramp up the pressure in an eight-minute added time period, but Luton got to the break with their one-goal lead intact, and Mark Robins responded at half time by bringing on Matty Godden to join forces with Viktor Gyokeres up top; Jamie Allen was sacrificed.
The change in shape worked a treat for Coventry, as with 66 minutes gone, Gyokeres was released down the left by a stunning threaded pass from Doyle, and the Swede picked out the run of Hamer, who arrived unchecked at the edge of the box to direct a crisp side-footed strike into the bottom corner.
Hamer's afternoon soon ended on a sour note as he came off injured with 10 minutes remaining in normal time, having seemingly damaged his leg in an awkward landing, but the 25-year-old's fine finish proved enough to force extra time.
Neither team fashioned many clear-cut chances during a cagey first 15 minutes of extra time, although Luton goalscorer Clark was booked for simulation after going down over Wilson's trailing leg inside the area.
Scrappy fouls and stoppages epitomised a tense extra-time period between two fatigued outfits, but two substitutes combined for what was initially thought to be a Luton winner, as a horror error from Jonathan Panzo allowed Taylor to steal in and slot home through the legs of Wilson.
However, the ball had clearly struck Taylor's hand as it bounced up from Panzo's boot, and the Coventry man breathed a huge sigh of relief as the goal was quickly ruled out.
Both sides displayed a masterclass in penalty-taking before sudden death, where Dan Potts continued Luton's perfect streak from the spot before Dabo fired the ball into the crowd to settle a wonderful Wembley battle.
The Hatters' promotion ends a 31-year absence from the top flight of English football, during which Luton were playing Conference football as recently as 2013-14 and only returned to the Championship in 2019.