The match went ahead despite Iraq's state news agency confirming one person had died and 60 were injured, while provincial health authorities said a young female doctor had also died.
Hamza Ahmed, 26, from Baghdad, died after being caught up in the incident, his brother Omar told The National. He had been in Basra since the start of the tournament. His brother, cousin and friend were injured.
The Arab Gulf Football Federation announced the match would go ahead as scheduled, and Iraq lifted the trophy with a 3-2 victory over Oman after extra time.
The host nation opened the scoring through midfielder Ibrahim Bayesh after 24 minutes. But 10 minutes into stoppage time Omani midfielder Salaah Al Yahyaei levelled from the penalty spot, sending the match into extra time.
Midfielder Amjad Attwan put Iraq ahead again after 116 minutes with a penalty. Three minutes later, Omani striker Omar Al Malki levelled again with a header.
Iraqi defender Manaf Younis scored the winning goal two minutes into added time.
Thousands of fans had walked to the 65,000-capacity stadium on Thursday morning before the match, with many prevented from entering.
A video posted on social media, apparently from the scene, showed fans crying for help as others were pushed along by the moving crowd.
Authorities later opened the gates of the stadium to relieve the pressure, allowing ticket holders to enter. Later they closed all gates but one, which was kept open for Omani fans.
They also opened nearby Al Minaa Stadium, which has a 30,000-seat capacity, for fans to watch the game on screens.
Calm soon returned to the area.
“After consultations with concerned parties in sultanate of Oman and to ensure the safety of the Omani citizens, and as a support to the brothers in the Republic of Iraq to make the final match a success, it has been decided to bring back fans who are still at Basra International Airport,” the Oman Football Federation said earlier.
It urged Omani fans still outside the stadium not to enter, but later it allowed fans to head to the stadium after securing their seats.
Meanwhile, Oman Air cancelled at least one flight to Basra.
The deadly incident came hours after the Governor of Basra, Asaad Al Eidani, called on fans not to gather outside the stadium, especially those without tickets.
“This could lead to a stampede and [the] perfect image of our country, hosting this event, could be tarnished only a few hours before the final ceremony,” Mr Al Eidani said late on Wednesday.
“We call upon you to abide to security forces guidelines to ensure the safety of the citizens,” he said, adding that dozens of big screens had been set up around the city for those without tickets.
Iraqi Prime Minister Mohammed Shia Al Sudani has travelled to Basra and met organisers to discuss the incident.
Mr Al Eidani warned fans that the Arab Gulf Cup Football Federation may be forced to move the match to another venue outside Iraq if measures were not taken to stop such incidents, prompting many of them to withdraw.
At the end of the match, Iraqi players hugged each other as they cried.
The fans shouted: "Long live Iraq" and "Oh Iraq, we are ready to sacrifice ourselves for you."
Outside the stadium and in Baghdad, fireworks lit up the sky while some shot into the air live ammunition despite warning from Iraqi Interior Ministry.
Thousands of fans poured on to the streets after the match, waiving Iraqi flag and dancing. Cars were honking in rhythmic succession as fans cheered: “Go, go the Lions of Mesopotamia.”
"That's not only a precious triumph, but a precious joy that we need so much and waited for a long time," Abbas Mohammed said, driving his car in a Baghdad street while hoisting the Iraqi flag.
"It's a bittersweet achievement," said Ali Yassir, standing near by.
"Unfortunately, the day started with a tragedy that made all of us sad. That trophy is for those who lost their lives or were wounded while trying to attend the match.
Mr Al Sudani congratulated the Iraq team.
“The cup is Iraqi,” he said. “We are proud of our lions.”
He also thanked those who were behind making the tournament a success.
The eight-team tournament kicked off on January 6, bringing together teams from Iraq, Yemen and the six Gulf Co-operation Council states — the UAE, Saudi Arabia, Kuwait, Bahrain, Oman and Qatar.
Iraq is hosting the biennial regional competition for the first time in more than four decades, after enduring wars, diplomatic isolation and instability after the 2003 US-led invasion that toppled Saddam Hussein.
Iraqis have celebrated the event as a triumph of sports diplomacy, part of continuing efforts to heal a political rift between their country and its Gulf neighbours, and recovery as a footballing nation.
They hoped hosting the event would turn a new page in the country's troubled history and represent a crucial step towards full national recovery, mainly by attracting sorely needed foreign investment.
Fifa banned Iraq from hosting international matches between 2003 and 2018, because of the poor security situation. It lifted the ban early last year.
Since late Wednesday, fans have flocked to Basra from other parts of Iraq, snarling traffic.
The local government in Basra announced an official holiday on Thursday in an attempt to clear the roads.
The Iraqi Interior Ministry is asking the public to celebrate in a “civilised way” and avoid celebratory gunfire. It has said it will arrest those who shoot into the air.
On Monday, Iraq beat Qatar 2-1 and hours later Oman beat Bahrain 1-0 to set up the final match of the tournament.