Skipper and PSV Eindhoven striker Bryan Ruiz headed home the winner in the 44th minute as Costa Rica became the first team from group D to qualify for the knock-out round.
The win also meant curtains for England in the group which was termed as the 'Group of Death' with one among the two high-profile teams between Uruguay and Italy will be bidding adieu after their final group league game.
Having shocked last edition's semi-finalists Uruguay 3-1 in the opening encounter, Costa Rica's win over the Azzurris was their second consecutive win over a top-10 team in the world.
While Italy will need a draw to make it to the last 16, Uruguay can't settle for anything less than a victory.
In the 43rd minute, Costa Rica looked like being denied a penalty when their striker Joel Campbell latched on to a ball from middle-third and sprinted down inside the box before being felled by Giorgio Chiellini but referee Enrique Osses thouight otherwise.
But within a minute, the Costa Ricans got their lead as left wing back Junior Diaz kept a measured cross from the left as Bryan Ruiz evaded the duo of Chiellini and Matteo Darmian to head home. The ball hit the horizontal before crossing the goalline beating a full stretched Gianluigi Buffon.
The first half could be divided into three distincts parts with first and last phase belonging to Costa Rica while Italy dominated for a duration during the middle phase.
The first 15 minutes belonged to Costa Rica who pressed really hard with Cristian Bolanos' inswinging corner saw Celso Borges head wide off the target despite wrong anticipation on Buffon's part.
Bolanos, Gamboa and Campbell took control of the midfield during that phase as Mario Balotelli cut a lonely figure upfront.
The next 20 minutes saw Italy get into the game as their midfield artist Andrea Pirlo got into the action providing a couple of assists for Balotelli.