Uruguay beat Chile 1-0 to secure top spot in Group C and set up a favourable quarter-final tie with Peru.
Chile's defeat, on the other hand, means they now face have a difficult quarter-final fixture against Colombia on Friday.
Elsewhere, Ecuador and this year's guest invitees Japan drew 1-1, meaning that both teams were eliminated from the tournament, having missed the chance to qualify for the quarter-finals as one of the best third-placed teams.
Chile 0-1 Uruguay
Chile came into the game knowing that they had already qualified for the quarter-finals and Uruguay had all but qualified due to their vastly superior goal difference over Japan but they were aware that top spot (and a more favourable run to the final) was still up for grabs.
Chile had the first good chance with midfielder Charles Aránguiz hitting a powerful shot which forced a good save from Uruguay goalkeeper Fernando Muslera.
However, Uruguay would create the better opportunities for the remainder of the half. Barcelona striker Luis Suárez rounded Gabriel Arias but took the ball wide and waited for too long to take his shot, allowing the Chile goalkeeper to get back and make a save.
Shortly afterwards, Chile defender Gonzalo Jara made a brilliant defensive header to deny a near-certain goal from the lurking Diego Godín after a good ball was was put in towards the far post.
The game got cagier from this point onward with previous few good chances for either side.
Chile had a penalty appeal waved away in the early stages of the second half when Atlético Madrid defender Godín fell and handled the ball.
The defending champions started to take control of proceedings and had one of the best chances of the game when Gullermo Maripán directed a header towards goal which was cleared off the line by José Giménez.
Uruguay held on and got the all-important winner in the 81st minute when substitute Jonathan Rodríguez clipped in a cross for Edinson Cavani to guide in an excellent header into the far corner.
Chile are now faced with a tricky-looking quarter-final game against Colombia on Friday 28 June whilst Uruguay have an extra day's rest before taking on Peru for a spot in the semis.
Ecuador 1-1 Japan
Ecuador and Japan knew they could not realistically finish in the top two positions in their group but could have qualified for the next round as one of the best third-placed teams.
Both teams had efforts from long-range which went well wide in the early stages, as they showed their intent to win the game. Japan, who were invited to the tournament as a guest side, took the lead in the 15th minute following a good piece of play.
Shōya Nakajima played a clever slide-rule pass to Shinji Okazaki, who had timed his run perfectly to stay onside. Ecuador goalkeeper Alexander Domínguez came rushing off his line but could only direct his clearance straight to Nakajima who took a touch before firing into the open net via the crossbar.
La Tricolor then missed a glorious chance to equalise after Eiji Kawashima gave the ball away in his own penalty area. Ángel Mena picked the ball up and squared it to former West Ham striker Enner Valencia who was off-balance and could only direct a tame effort that was comfortably saved by Kawashima.
Japan continued to cause their own problems, minutes later they lost the ball just outside of their penalty area whilst trying to play out from the back. However, once again Valencia failed to capitalise, having a heavy first-touch which allowed the Japan goalkeeper to come and collect the ball.
Ecuador did equalise 11 minutes from half-time when Robert Arboleda's shot was saved by Kawashima but only into the path of Mena who was there to stab home from close range.
Japan looked the more likely to get the winner in the second half but were let down by some poor finishing. Daiki Sugioka delivered an exquisite long ball which pierced Ecuador's defence and reached substitute Ayase Ueda. However, the forward could not get a clean contact and the chance went begging.
The Asian side had another fantastic opportunity a minute from time when new Real Madrid signing Takefusa Kubo played in substitute Daizen Maeda but the forward's first-touch was poor and he rushed his effort, hitting it straight at Domínguez.
Neither team lacked in effort but they ultimately did not possess the quality in the final third to secure the victory and progress in the tournament.