In the quarterfinals, Van Gaal's decision to replace starting goalkeeper Jasper Cillessen with Tim Krul paid off as the second-choice man guessed the right direction on every penalty and lifted the Dutch past Costa Rica.
But in this game, Van Gaal used all three of his substitutes before the 120 minutes were up, and Cillessen failed to save any of Argentina's four penalties.
"If I had the opportunity to substitute Jasper, I would've done it, but I had already used three substitutes, so I couldn't do that," Van Gaal said after the match.
Right back Daryl Janmaat replaced Bruno Martins at halftime, Jordy Clasie entered for the ineffective Nigel de Jong, and Klaas-Jan Huntelaar took over for Robin van Persie in extra time. The manager said he had little choice but to make all three subs, none of which were for purely tactical reasons.
"I substituted Janmaat for Indi because Martins Indi already had a yellow card," Van Gaal said. "I didn't want to take a risk with De Jong because he would be injured. I substituted Van Persie because he was exhausted."
Van Gaal was also questioned about choosing centre-back Ron Vlaar to take the Dutch's first penalty, which Sergio Romero saved with little trouble.
"I felt Vlaar was the best player on the pitch and he has a great deal of confidence," Van Gaal said "It just goes to show that when push comes to shove, it's not easy to score a goal in penalties."
Ironically, Van Gaal was Romero's first manager in Europe when the goalkeeper joined Dutch club AZ Alkmaar in 2009.
"I didn't teach Romero to stop penalties," Van Gaal said. "We were the club that brought him to Europe because he was a big talent. He is the one who has the merits for that. ... Alkmaar was his first [European] club and I was the manager there."
Romero gave credit to his former manager after the match.
"I went to the dressing room to congratulate him," the goalkeeper said of Van Gaal. "He helped me a lot when I arrived in Holland in a completely different country. He spoke Spanish and helped me a lot. So just as I'm grateful to Alejandro, I'm also grateful to Van Gaal and everything he did for me.
"He is a person that teaches a lot to the players how to grow. He helped me grow. I arrived when I was 20 years old and I will be forever grateful to that coach."
Despite the defeat, Van Gaal called his team's performance in Brazil "a fantastic tournament."
"In general, I'm not interested in what people say about me or my team unless it's positive," he said. "We didn't create very much. In all the other matches, we created more opportunities than today. That says something about the Argentinean team. That says something about the tactical match we saw.
"It is the most terrible scenario to lose in penalties. It is a big disappointment."
Van Gaal will still have one more game in charge of the Netherlands before taking over at Manchester United -- the third-place game against Brazil on Saturday. With just two days to prepare for the hosts, Van Gaal expressed his displeasure.
"This match should never be played, I've been saying this for 10 years," he said. "We will just have to play a good match, but it's also unfair because we have one less day to recover. Chances are, that you lose twice in a row. And in a tournament in which you've played so marvelously well, you go home a loser.
"You shouldn't have players play a third-fourth-place match, because there's only one award that counts and that is becoming World Cup champion."
Van Gaal: We lost in worst way possible
Netherlands coach Louis van Gaal reflects on his side's shootout loss to Argentina, saying they were an equal team and lost in the worst way possible.
Poor individual performances for Dutch
FC's Craig Burley hands out his grades for the Netherlands in their semifinal against Argentina.
Van Gaal: We weren't expected to advance
Netherlands coach Louis van Gaal expresses his pride in his side for surpassing the expectations placed on them.
Romero thanks Sabella and van Gaal
Argentina's semifinal hero Sergio Romero thanks his manager Alejandro Sabella, and the opposition manager Louis van Gaal who helped him settle in Holland as a youngster.
A tale of two semifinals
The ESPN Last Call crew break down the vast differences between the two World Cup semifinals and debate which game was a harder one to lose.