The 23-year-old Yorkshireman was looking to join Andy Murray and John Lloyd as the only British male singles finalists at Melbourne Park in the Open era but looked tired in mind and body against sixth seed Cilic, who won 6-2 7-6 (7/4) 6-2 to reach his third grand slam final.
The Croatian, the US Open champion in 2014 and runner-up at Wimbledon last year, will play either the man who beat him at SW19, Roger Federer, or young Korean Chung Hyeon.
Edmund, meanwhile, heads home as a top-30 player for the first time and having proved to himself and the tennis world that he can challenge for the biggest titles.
Cilic was, of course, the more experienced but this was only his second semi-final here and his first since losing to Murray eight years ago. He looked nervous to start with, bouncing the ball at least 20 times before hitting his first serve.
Edmund hit two enormous forehands to win the first point and had two chances for an immediate break but Cilic’s serve dug him out of trouble.
The Croatian’s tactic was simple, keep the ball off Edmund’s forehand, and because of the pace and depth on his shots, he was able to succeed where all the 23-year-old’s other opponents had failed.
Two breaks of serve gave Cilic the opening set, and Edmund promptly headed off court for his third medical time-out of the tournament. He had spent 14 hours and 48 minutes on court on his way through to the semis - admittedly only three minutes longer than his opponent - surviving tense battles and intense heat.
Edmund certainly did not look physically at his best, whether through injury or fatigue, but his coach Fredrik Rosengren, decked out in a matching black and luminous pink shirt, tried to pump up his charge as he prepared to start the second set.
Cilic’s US Open victory is often overlooked amid the dominance of the ‘big four’ and subsequently Stan Wawrinka but he played two of the more impressive slam matches of recent years to beat Federer in the semi-finals and Kei Nishikori in the final.
There is nothing flashy about the 29-year-old’s game but his flat, hard groundstrokes are tough to break down, his serve is one of the best around and he moves very well for a man of 6ft 6in.
Edmund took a page out of Federer’s book from Wednesday night, firing himself up by arguing long and hard with umpire John Blom after Cilic was awarded a point that he felt should have been replayed.
A half chance at 0-30 on the Cilic serve at 4-4 came and went but Edmund stayed steady on his own serve to force a tie-break. However, Cilic was rock solid and a backhand winner put him one set away.
Edmund had never recovered from two sets to love down to win a match and it looked very unlikely that would change here, particularly when Cilic broke serve again in the third game of the third set.
Edmund was hanging on grimly but another break left Cilic serving for the match, and he clinched victory after two hours and 18 minutes.