"Everyone is distraught. The players and I all had a big dream and a goal to reach the final in Berlin. That dream did not come true," Klinsmann lamented.
"I think it will take some time to digest this defeat.
"It hurts, this fatal blow late in the match and it takes time to stomach that."
However, he said the German people should be proud and the team’s future was bright.
"After the match I told the players in the dressing room that they have a lot to be proud of," said the 1990 World Cup winner with West Germany.
"Our objective was to make it to the final but we narrowly missed it. However the team can still be proud of their achievements.
"This is a very young team and they showed amazing spirit and character. They made the whole country proud.
"We are optimistic and confident that these players will get better. We should not be afraid of what is coming up in the future. We have every reason to be optimistic."
The 41 year old also paid tribute to the fans that had gotten behind the team.
"This World Cup has been a huge success for the team and the country. We have showed a whole new German face to the world," Klinsmann explained.
"It is something special to play a World Cup in your own country. We have shown the world Germany is a friendly place and it is wonderful that football can stir these emotions."
After two years at the helm, the US based Klinsmann would not be drawn on his future.
"My contract situation is irrelevant. I need time to talk with my family about it," he said.
"It is not important. What is important is that this team gave the nation attacking football and showed it can compete with the best.
"Let's just talk about the team and not my future."