Ronnie Moore's side are out of the Johnstone's Paint Trophy after losing out to Sheffield United 4-3 on penalties.
Scott Fenwick got Pools a deserved equaliser just after the break but, with no more goals from open play, the game was decided with spot-kicks and the Blades took the win.
Sheffield United were dominant from the off this afternoon, testing Adam Bartlett on a couple of occasions before opening the scoring on 6 minutes.
Adam Bartlett did well with the initial shot from Marc McNulty, blocking the effort from close range but Ryan Flynn was there to force home the opener, despite the attention of Harry Worley on the line.
Bartlett came to the rescue again shortly after the goal, denying Martyn Woolford with a brave block at his feet as the visitors continued to pile the pressure on the Pools goal.
With the first 25 minutes of the game having passed, Moore’s men had failed to offer anything to test George Long in the Sheffield United goal.
But as the half went on, Pools gradually became more composed and began to offer more going forward – largely thanks to Rhys Oates who showed pace and determination down the right wing.
It was Oates who set up the first opening for Pools on 31 minutes as he burst down the wing to cross into the box for the lively Lewis Hawkins. But the midfielder mis-timed his shot and the ball was cleared.
Rakish Bingham was another to find space down the right, crossing to the far post where Jake Carroll arrived to try his luck with a header but his effort went just wide of the post.
With the 45th minute arriving and Pools enjoying their strongest spell so far, Michael Duckworth had the best chance of the half for the hosts. Oates played the full back in down the right and Duckworth took the ball into space before sending a curled strike around
Long and also, unfortunately, around the far post.
The half-time whistle brought Pools’ best spell of the game so far to an end but there was more to come after the break.
With less than ten minutes of the second half played, Pools were level; it was a clinical break away by Moore’s side and with Bingham pushing forward deep into the final third, he squared the ball unselfishly into the path of strike partner Scott Fenwick and he showed a calm finish to fire home the equaliser.
Michael Duckworth put in a great challenge inside the box to clear the danger for Pools but in doing so he picked up an injury and that was his last action of the game as he was replaced by Josh Nearney, who came on to make his professional debut for the Club.
Jake Carroll forced his way in from the left to try a strike from 20 yards out but his effort, which highlighted the increase in confidence from Pools in this second half, went wide of the far post.
Sheffield United were starting to look a little more convincing again at the other end and Josh Nearney put in a crucial block inside the area to intercept a Marc McNulty cross.
The Blades were back on the attack shortly after and, with Nearney having slipped outside the box, Wooldford ran through with just Bartlett to beat but the keeper did it again with another great block to keep the ball out of the net.
Rhys Oates, who worked so hard throughout the game this evening, popped up in the box to put his own challenge in to deny Jamal Campbell-Ryce with a strike.
Pools were a stronger outfit in the second half though and there was much more of an attacking threat for the visitors to deal with.
But the 90-minute mark arrived and there were no more goals at either end, meaning penalties were needed to decide the tie.
Bingham, Oates and Featherstone scored for Pools but George Long did enough with saves from Harrison and Fenwick to see his team through to the next round of the Johnstone's Paint Trophy
Full Time: Hartlepool United 1 Sheffield United 1 (Sheffield United win 4-3 on penalties).
Booked: Worley (51)
Attendance: 2221 (366 Sheffield United)
Pools: Bartlett, Harrison, Worley, Jones, Duckworth (Nearney 65), Hawkins, Featherstone, Carroll, Bingham, Fenwick, Oates.
Subs Not Used: Denton, Oyenuga, Nelson-Addy, Smith.
Sheffield United: Long, Alcock, McGahey, Kennedy (Sharp 86), McEveley, Wallace, Basham, Woolford, Flynn (Campbell_Ryce 72), McNulty, Higdon.
Subs Not Used: Howard, Collins, Sammon.