The Azzurri pegged back Vicente del Bosque's men for long periods and could have broke the deadlock in a game which remained goalless after extra time.
Leonardo Bonucci's skied spot kick allowed Jesus Navas to send Spain through in a pulsating shootout to meet Brazil in the final, but Prandelli feels they can take plenty positives from the game.
"We earned respect. The respect of our opponents and the awareness that we're able to compete with the best," he told reporters.
"Spain are a great team, they have continuity and we wish to have that continuity.
"We played the ball a lot, short passes on the floor and displayed great generosity. When you get to the penalty kicks though, anything than happen."
Italy were stubborn preventing la Roja from having a single shot on target in the opening 45 minutes but Prandelli conceded that it was tough to continue in the same high-intensity vein throughout the entire game.
"We played a great first half and then of course we couldn't keep up the same intensity," he continued.
"We tried to play the ball low, but they were very good in defence and exploited some chances on the counter-attack. We used [Emanuele] Giaccherini a lot, especially in the first half and I have to congratulate my team.
"As I said before, we wanted to play the way we did. We wanted to deal with Spain on a technical level as well, we started out this way and I want to continue this because we have the right qualities to play this way."
Despite their heroic efforts against the world's best, Prandelli was not in the mood to talk about the upcoming 2014 World Cup.
"At this moment I don't have the right frame of mind to answer questions about the World Cup. Clearly, we have to qualify. We have not qualified yet," he added.
"Then, we have to try and do so in better physical condition. There will be time to talk about these problems and propose suggestions in terms of calendar changes."
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