Luis Suarez was mired in another biting controversy as Uruguay skipper Diego Godin sent his country into the last 16 with a late header to down Italy 1-0 in Group D at Arena das Dunas.
Suarez appeared to bite Giorgio Chiellini, who reacted with an elbow, but the pair remained on the pitch before Godin won it for Uruguay with a header from a corner with nine minutes remaining to seal the runners-up spot in Group D.
Suarez, who served a 10-match ban for biting Chelsea defender Branislav Ivanovic in 2013, clashed with Italian defender Chiellini in the 79th minute.
Television replays showed Suarez moving his head towards Chiellini, who responded by swinging an arm, before chasing the referee to apparently insist he had been bitten on his shoulder.
Suarez could face suspension if FIFA disciplinary officials uphold Chiellini's protests, and the incident cast a shadow over a hard-fought win for the South Americans.
In a first half of few chances, Italian skipper Gianluigi Buffon pulled off a great double save to deny first Suarez and then Nicolas Lodeiro.
After the break, Buffon again made a fantastic save to deny Suarez before Claudio Marchisio was sent off for a studs-up challenge on Egidio Rios on 59 minutes.
The dramatic ending came in stark contrast to an abysmal first period of a match the Uruguayans needed to win in order to progress along with Costa Rica from Group D.
Despite the onus being on them to attack, Oscar Tabarez's side barely managed to muster a single chance of note in a dismal first half which was largely controlled by the Italians.
In an opening spell constantly broken up by niggling fouls and over-reactions, Chiellini had an early penalty claim waved away and Andrea Pirlo saw a long-range free-kick pushed over the bar by Fernando Muslero.
Balotelli's raised foot challenge on Cristian Rodriguez earned him his costly yellow card – which would have seen him miss their next game - but the extrovert former Manchester City man continued to provide what passed for the most persistent threat on the pitch.
Ciro Immobile could have put Italy ahead in the 28th minute when he met Mattia De Sciglio's low cross into the box from the left but fired over the bar from just inside the box.
Suarez, clearly struggling for match fitness, was largely anonymous for the opening half-hour but had his first chance in the 33rd minute when he nipped in behind the Italian defence and saw his shot from a tight angle flapped away by Buffon, who also saved the follow-up from Lodeiro.
Uruguayan frustration was summed up toward the end of the first half when Martin Caceres attempted a ridiculous 60-yard chip over Buffon which sailed well wide.
As the second half got under way there were few signs of urgency on Uruguay's part, although Edinson Cavani demanded a penalty after falling theatrically in the box under the challenge of Leonardo Bonucci.
The South Americans gradually started to press and had a good chance in the 58th minute when Rodriguez played a sharp one-two with Suarez, cutting into the box from the left but splaying his shot wide.
Moments later, the Italians were reduced to 10 men when Marchisio was sent off for a careless, studs-up foul on Rios.
But despite the extra man advantage, Uruguay continued to struggle to create openings with the Italian defence adept at suffocating their opponents' attacking threat.
The golden opportunity the Uruguayans were hoping for arrived in the 65th minute when Cavani sent Suarez through but Buffon got down to his right superbly to palm away the Liverpool man's shot.
Controversy raged in the 79th minute after Chiellini and Suarez fell after an off-the-ball clash in the Italian box.
Both players fell to the floor with Suarez seeming to lose a tooth in the melee, which is likely to be the subject of further investigation.
Two minutes later the South Americans grabbed the goal they needed when Godin rose highest from a corner to send his side through to the knockout stages as group runners-up.