Paraguay held their nerve to beat the five-time world champions Brazil 4-3 on penalties in a pulsating thriller to advance to the Copa America semi-finals.
Although former Manchester City striker Robinho put Brazil ahead in the 15th minute following a cross from Dani Alves, Thiago Silva's second-half handball allowed Derlis Gonzalez to level from the spot and force the shootout, the BBC reported.
Paraguay then prevailed over Dunga's side during penalty shootout as Brazil were ousted after missing two attempts and Gonzalez converting the decisive strike again.
The defeat brought back the memories of 2011 Copa America when Brazil were eliminated from the South American tournament following a 2-0 defeat to Paraguay in the quarter-finals.
Paraguay will next face Argentina on Wednesday in Concepcion in the semi-final contest to book a berth for the summit clash.