Argentina secured a debut Davis Cup triumph on their fifth appearance in the final when they battled back to beat Croatia. Federico Delbonis and Juan Martin Del Potro won Sunday's singles to clinch a thrilling 3-2 win.
Although Delbonis won the crucial point in the fifth rubber when he comfortably defeated Karlovic 6-3 6-4 6-2, it was Del Potro who produced the performance of the match earlier in the day.
Croatia were one set away from claiming a second Davis Cup triumph but Del Potro fought back from two sets down to beat home favorite Marin Cilic 6-7 2-6 7-5 6-4 6-3.
Sixth-ranked Cilic appeared poised to finish off Argentina and delight the passionate home fans.
However, Del Potro, the 2009 U.S. Open champion who has dropped to 38 in the world after a lengthy injury layoff, responded ferociously with his back to the wall.
He recovered from a break down early in the fifth set to close out the match after almost five hours and keep Argentine hopes alive at 2-2.
Croatia led 2-1 following Friday's two singles and Saturday's doubles and only twice since the World Group format was introduced in 1981 had a team reversed such a scoreline in the final.
At 37, Karlovic was the oldest man to play in a Davis Cup singles rubber in almost 100 years and 11 years olders than Delbonis.
The towering Croat was only playing after selflessly reversing his retirement from Davis Cup to help the team following an injury to Borna Coric.
Delbonis sparked wild celebrations among several thousand away fans in the Zagreb Arena, including former Argentina soccer great Diego Maradona when he converted his second match point.
It was fifth time lucky for Argentina, who lost in the final in 1981, 2006, 2008 and 2011.
"I am trying to believe it," Delbonis said in a courtside interview as his team mates and compatriots celebrated around him.
"This is a dream come true. We play for our country, we play with our heart and we try to do our best. It's amazing," he added.
"I tried to stay focused and do what I had to do. For Argentina I think it's the best moment."