Luke Betts' side took the lead early through Oscar Wakeling, but were pegged back by and eighth minute penalty, prior to going into the interval trailing 3-1.
Kell Fiddy struck early in the second half, though Leiston restored their two goal lead for 4-2.
Harry Hopkins meanwhile replied shortly after, scoring twice albeit either side of a Leiston fifth.
Kell Fiddy nearly sent the tie to penalties at the death, but hooked over the crossbar, with Needham also being denied numerous times by the woodwork.
Needham started brightly, Evan Gledhill's first minute low strike was initially spilt by the keeper, ahead of the striker's dangerous 25-yard fierce free-kick (3') being held by the keeper.
Leiston (4') shot wide from point blank range, before Needham broke the deadlock (6').
A mazy run from Oscar Wakeling, driving through the defence onto the left-hand side, drew the keeper off his line to slide home cooly into the bottom far corner.
Leiston (8') soon equalised from the spot, Jack McLeavy sent Skinner the wrong way to find the bottom right hand corner after a foul by Charlie Smy.
Wakeling (10') in reply had a ferocious dipping strike tipped over, which Flynn Bobby's resulting corner (11') was met by Olly Reynolds who glanced wide of the far post.
Leiston (18') volleyed fiercely over from outside the box, with a great block from Olly Bowman (20') denying a close range shot at goal.
An excellent tackle from Reynolds (22') cut out a counter attack at the expense of a corner, though Needham forced a strong save from the keeper (28').
Flynn Bobby weaved into space outside the area, only to see his thunderous low strike across goal shovelled behind by the keeper, low to his left.
Needham (29') had the ball in the net, albeit ruled out for offside against Harry Hopkins.
Charlie Smy's deep cross was glanced on by Hopkins for the arriving Olly Reynolds to turn home, but the flag was up against Hopkins.
Bobby's 32nd minute low strike was held by the keeper, prior to Skinner expertly holding onto a close range effort two minutes later.
The woodwork (35') prevented Gledhill from regaining Needham's lead, the striker jinked into space to bend an excellent strike destined for the top far corner only to clatter back into play off the inside of the post.
James Coton exploited space, though his low shot was saved (37'), albeit Leiston took the lead moments later - Ollie Long ran through one on one to find the roof of the net.
A slip at the back meanwhile saw Ewan Parlett free on the right-hand side to wrap a third home, into the bottom far corner after 41 minutes.
After the restart, Charlie Skinner (50') blocked a close range strike from an acute angle, prior to the woodwork again thwarting Needham at the other end (52').
Flynn Bobby's excellent left wing corner towards goal clattered off the inside of the near post, that trickled across the line but bounced out off the opposite post.
A spree of goals followed at both ends, with the two teams sharing 5 goals in the space of 16 minutes.
The first saw Bobby once more cause mayhem with a corner, Kell Fiddy rose highest among a chaotic six yard box to loop his header over the onrushing keeper and into the net, reducing the deficit to 3-2 after 56 minutes.
Leiston struck right back (57'), Stan Horne picked out the bottom far corner from close range to restore their two goal lead, but for Needham to reply once more on the hour mark.
Harry Hopkins lashed home into the bottom left-hand corner to reduce to deficit right back to 4-3.
Leiston (64') lashed wide of the bottom far corner, as the second half remained a very pulsating encounter.
The fifth, and ultimately decisive Leiston goal arrived in the 69th minute after a ball across from the left was cushioned over Skinner by Long at point blank range.
Needham responded three minutes later, setting up a dramatic 18 minutes. Olly Reynolds lofted an exquisite diagonal ball threading Hopkins through expertly on the far side of the box to expertly lob the keeper and find the top corner, picking up a brace in the process for 5-4.
Luke Betts' side then came a whisker away from an equaliser (77'), Gledhill's brilliant 25-yard free-kick curled round the wall, destined to find the top near, right-hand, corner but for the keeper to outrageously but deftly tip it onto the angle of post and bar, but for a goal-kick to be given.
Needham threw wave after wave of attacks at the Leiston goal, Gledhill (77') saw a fierce shot held, while Bobby's left wing corner (86') was met by Kellen Fiddy whose header was blocked off the line. Reynolds latched onto the rebound, although his header was held by the stopper.
A crucial block from Reynolds kept out Horne's goal-bound effort (89'), who'd rounded Skinner, followed by Leiston glancing a free-kick wide of the near post (92').
Skinner meanwhile narrowed down the angle to smother a shot behind for a corner two minutes later, before the young Reds went marginally close three times in the space of two minutes.
Gledhill broke into space at close range only to shoot wide (98'), ahead of a fantastic cross being glanced onto Fiddy only to hook agonisingly over at close range moments later.
Needham then swung a long range free-kick (90'+10') to the far post, just evading Skinner but falling to Brad Smith whose header at goal was comfortably pouched by the keeper.
A valiant performance in a thrilling cup final ended in defeat for Needham, who return to league action - at home to Ipswich Wanderers on Thursday (7:45pm), in pursuit of a second league triumph.
Needham: 1 Charlie Skinner, 2 Olly Bowman (65' Wright), 3 Brad Smth, 4 Kellen Fiddy (c), 5 Oliver Reynolds, 6 Charlie Smy, 7 Oscar Wakeling (70' Vieira), 8 Harry Hopkins, 10 James Coton (88' Tamila), 11 Flynn Bobby, 19 Evan Gledhill. Subs: 9 Henry Vieira, 14 Tyler Wright, 15 Fenton Grimmer, 16 Jack Nunn, 17 Zak Tamila.
Booked: L16 (83'),
Goals: Jack McLeavy (8'pen), Ollie Long (37', 69'), Ewan Parlett (41'), Stan Horne (57'); Oscar Wakeling (6'), Kellen Fiddy (56'), Harry Hopkins (60', 72').
Att 475.

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