Blues go down to Sunderland in FA Youth Cup
Byron Lawrence and Joe Robinson missed for Blues as Thomas Robson scored the decisive penalty.
Jack Willbye opened the scoring for Town with a thunderous strike from 35 yards in the first-half.
Ten minutes into the second-half Sunderland were level, a fine strike from the edge of the area from Lynden Gooch getting the Black Cats back on equal terms.
Town had an early opportunity when Willbye's free-kick was poorly punched by Maks Strysek to the feet of Lawrence, whose shot hit the underside of the bar.
The Black Cats had their first strike on goal in the 20th minute as Martin Smith fired straight at Michael Crowe from the edge of the box.
Blues took the lead in the 38th minute through Willbye. The midfielder picked the ball up 35 yards out and hammered it past Strysek, who didn't move as the ball went passed him.
Blues were knocking on the door again four minutes later, this time Lawrence had the ball inside the box but his high shot was tipped over by Strysek.
Town continued to trouble the Black Cats’ defence, this time Lawrence played the ball across the face of goal with Matthew Clarke failing to get his foot on it.
Sunderland drew level soon after, Gooch picked the ball up on the edge of the box and cut in before burying his shot into the bottom corner.
Blues continued to press and came within inches of going in front. Edward Bishop made a great run into the box but 'keeper Strysek got a hand on the ball just before the striker could pull the trigger.
Substitute Cemal Ramadan was the next in line to have an effort at goal. This time his volley from the edge of the box was deflected wide for a corner.
Crowe came to the rescue for Town with eight minutes left, tipping Andrew Nelson's shot over for a corner.
Both teams tired during extra-time with neither side able to carve out any goal scoring opportunities and it was left to the tension of a penalty shoot-out to decide the outcome,