Germany crashed out of the World Cup in the last 32 after Paraguay stunned them 4-3 on penalties following a 1-1 draw in Foxborough on Monday.
The defeat also marked the first time Germany have ever lost a penalty shootout at a World Cup.
Julio Enciso gave Paraguay a shock first-half lead with a towering header before Kai Havertz equalised nine minutes after the restart with his third goal of the tournament.
Jonathan Tah then had what looked to be the winner ruled out following a VAR review in extra time, allowing Paraguay to force a dramatic shootout in which the momentum repeatedly swung between the two sides.
Paraguay goalkeeper Orlando Gill saved penalties from Havertz and Nick Woltemade, although his teammates squandered two opportunities to seal victory before Jose Canale emphatically converted the decisive spot-kick after Tah blazed Germany’s fifth penalty over the bar.
It was another disappointing early exit for Germany, who were appearing in the World Cup knockout stages for the first time since lifting the trophy in 2014.
For Paraguay, it was arguably the greatest victory in their World Cup history. Their reward is a daunting last-16 tie against an in-form France side, provided Les Bleus overcome Sweden.
Julian Nagelsmann handed Deniz Undav his first start of the tournament after the Stuttgart striker scored three goals as a substitute during the group stage.
He replaced Jamal Musiala, while Nathaniel Brown returned at left-back after missing the defeat to Ecuador as a precaution because of a minor injury.
Paraguay welcomed back Miguel Almiron following a one-match suspension after he became the first player sent off under FIFA’s new law prohibiting players from covering their mouths during on-field confrontations.
Having urged his players to seize “the opportunity of a lifetime”, Paraguay coach Gustavo Alfaro almost saw them make the perfect start inside the opening minute.
Junior Alonso found space at the back post from a corner but could not beat Manuel Neuer from close range.
Germany’s emphatic 7-1 victory over Curacao in their opening match had highlighted their attacking potential, but it also masked what has otherwise been a surprisingly blunt forward line.
Undav curled an effort wide as Germany struggled to break down Paraguay’s disciplined defence, and they were punished just before half-time after losing their defensive shape.
Following another corner, Paraguay recycled possession before Matias Galarza whipped a dangerous cross into the area, where the completely unmarked Enciso powered a header beyond Neuer.
Remarkably, it was Paraguay’s first goal in a World Cup knockout match, having failed to score in each of their previous five appearances, including a 1-0 defeat to Germany in the last 16 in 2002.
Germany, largely devoid of attacking ideas before the interval, introduced Leon Goretzka at half-time but almost fell further behind moments later when Joshua Kimmich’s under-hit backpass forced Neuer into a desperate race from his goal to deny Enciso a second.
The equaliser eventually arrived in the 54th minute. Florian Wirtz drifted in from the left before delivering an inviting cross that Havertz glanced expertly into the far corner.
Paraguay then lost Enciso to injury, depriving them of their biggest attacking threat and increasing the sense that Germany’s sustained pressure would eventually produce a winner.
Gill had other ideas, producing an outstanding reflex save to claw away another Havertz header from a Wirtz cross as Paraguay held firm to force extra time.
Tah believed he had finally broken the deadlock with a powerful back-post header from Brown’s looping corner, only for VAR to rule it out after Waldemar Anton was adjudged to have fouled Gill.
Anton later headed straight at the Paraguay goalkeeper from another set-piece, but Alfaro’s side survived Germany’s aerial bombardment before holding their nerve in the shootout to complete one of the biggest upsets of the tournament.
