Thabo Mnyamane, who netted the winner against SuperSport United in the previous round started, while Swallows had Virgil Vries back in goal with Musa Nyatama as captain.
Vhadau vhadamani were ahead on 18 minutes when Mnyamane powered home a free-kick from the edge of the area in off the top of the post after Sipho Sibiya committed a foul outside the area.
Vries was at full stretch to deny Farai Madhanaga finding the near corner with a snap-shot from a loose ball moments before the half-hour mark following a smartly taken corner-kick.
With seven minutes to halftime, Swallows were caught wanting again as Lehlohonolo Nonyane headed a free-kick from Mnyamane onto the crossbar.
Swallows levelled before the break after Sibiya headed home from the near side of the area following a cross-field delivery.
Vhadau vhadamani regrouped five minutes from the interval and restored parity through a diving header by Rhulani Manzini after Mogakolodi Ngele's teasing ball.
Swallows had a chance to go level after Vuyo Mere slide in from the back-post midway in the second half to get on the end of a corner, but Arubi smothered.
Tshakhuma made the first change of the match in the last 20 minutes in Tokelo Rantie, who entered in the place of Manzini.
Swallows levelled again a little later when Mere pounced on a near post delivery by Ruzaigh Gamildien to volley in and force extra-time.
Tshakhuma should've gone back ahead from the spot minutes inside extra-time following a foul on Jospeh Malongoane by Sifiso Hlanti, but Vries denied Meshack Maphangule, as penalties followed.
A miss from Nyatama in the decisive kick of the shoot-out ended Swallows' unbeaten run, as Tshakhuma reigned victors following four successful conversions.
Cape Town All Stars 3-3 Cape Town Spurs (All Stars win 5-3 on penalties)
Tshakuma: Arubi, Lukhubeni, Ndengane, Ravhuhali, Nonyane, Madhanaga, Ngele, Mnyamane, Manzini, Manaka, Ngema
Subs: Mhlongo, Mabotja,Thopola, Rakhale, Nevhulamba, Rantie, Maphangule, Theron, Malongoane.
Swallows: Vries, Mere, Ngcobo, Sibiya, Hlanti, Mahlatsi, Nyatama, Thibedi, Sekgota, Mhlongo, Malinga.
Subs: Ngobeni, Khupe, Matlaba, Seabi, Mokoena, Mosadi, Mthethwa, Gozar, Gamildien.