Ballack drilled the spot kick straight down the middle after Douglas committed himself early.
"It is easy to play with Frank because he is such a good player, " Ballack explained.
But after Michael Carrick handled in the area, Ballack won it from the spot.
Michael Ballack has been in something approaching his true form this season, and yet he was sidelined.
Ballack was so incensed he protested alongside the referee for 40 yards before getting a yellow card.
The winner is announced on Sunday but Lampard, who partners Ballack in the Blues' midfield, was overlooked.
Up stepped Ballack, who brilliantly sent the keeper the wrong way and put Chelsea back into the lead.
Soon after, Ballack hit the outside of the post with a 25-yard free-kick as Chelsea continued to press.
With Deco suspended, Chelsea brought Michael Ballack into the starting line-up - their only change from the weekend.
Scolari had pinpointed Ballack as 'a highlight of the tournament' and the inspirational Chelsea midfielder did not disappoint.
Chelsea confirmed Cole's departure when they announced German midfielder Michael Ballack and right-back Juliano Belletti would also be leaving.
But otherwise it was one-way traffic and after Michael Ballack's drive made it 1-1, Salomon Kalou slid in a second.
Frustration was building for Chelsea and Ballack and Drogba argued with each other as they prepared to take a free-kick.
Most famously, Abramovich wanted to bring relatively old players like Michael Ballack and Andriy Shevchenko, both aged 30, onto the team.
Unfortunately for Wales, the visitors had the outstanding midfielder in Ballack, the Chelsea man always a threat from an advanced role.
He could do nothing about Chelsea's fifth, though, Ballack waltzing into the area completely unmarked to head home Joe Cole's pin-point cross.
Long balls up to an isolated Anelka brought no joy, and Ballack looked short of fitness in a midfield that was misfiring.
Essien was a regular for the English champions last season, but the arrival of Germany captain Michael Ballack puts his place at risk.
Captain Michael Ballack said the team has deserved their shoot-out win, which came after the match finished 1-1 at the end of extra-time.
BBC: SPORT | Football | World Cup 2006 | Teams | Germany | Klinsmann hails 'fantastic' fans
Liverpool keeper Pepe Reina had been virtually unemployed, but he was in action after 66 minutes when Michael Ballack headed on Lampard's free-kick.
Michael Ballack put Chelsea ahead at Stamford Bridge in a game they had to win to stand any realistic chance of winning the title.
Coach Voller will almost certainly include players who have cemented their reputations during Bayer's run, such as Michael Ballack, Berndt Schneider, and Carsten Ramleow.
Joe Cole's shot hit the bar as United, who lost Nemanja Vidic to injury, backtracked before Ballack headed Chelsea in front on 45 minutes.
They started well enough, Anelka seeing a smart effort from range beaten away by keeper Beto and Ballack having a goalbound shot deflected wide.
German midfielder Michael Ballack hit the outside of the post with a fine free-kick, while Hull's Kevin Kilbane hit the woodwork with a header.
Even so, Kalou, Jon Obi Mikel, Joe Cole, Ballack and Zhirkov all either forced regulation saves from Robinson or missed the target before the break.
Michael Ballack also saw red and Lampard scored a consolation penalty.
Michael Ballack scored a late penalty for the Blues but Queiroz feels Ballack should have also conceded a penalty for an apparent foul on Cristiano Ronaldo.
The Wolves stopper produced another great save soon after to deny Lukas Podolski from 10 yards, after the Bayern Munich striker was put through by Ballack.
With the likes of Didier Drogba, Michael Ballack and Ricardo Carvalho recalled to the side, the Blues certainly looked capable of producing a result on paper.
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