"It's a pretty awesome feeling," Michelsen said.
"I'm just so happy, and probably a little bit relieved."
Through pool play New Zealand had been poor in front of goal. This time penalty corners did the trick for them.
They scored two from their seven attempts in the match and importantly kept Argentina scoreless from their six set pieces.
Defender Brooke Neal scored the equaliser from a neat set play, the ball flying over goalkeeper Belen Succi.
The second rocked Argentina, midfielder Ella Gunson driving the ball towards Michelsen coming in from the left, and her deft stick work got the ball into the net.
The Black Sticks, instead of slowing play down, gave away too much soft ball late on but survived by a variety of means in the final, nerve-jangling minutes.
"We did a really good second half, the chances were there," Merino admitted.
South Korea caused an upset in the first quarter-final.
Having drawn 3-3 with sixth-ranked Germany, the Koreans were far superior in the penalty shootout, taking their chances impressively against a tentative German side to win it 3-1.
The Koreans linked arms and danced delightedly in a circle after the final goal.
"We had our chances and in the shootout. They are a strong side but we should have, and could have, won this game," disappointed German captain Janne Muller-Wieland said.
World No 1 Netherlands play China and England face the US in tomorrow's remaining quarter-finals.