Italy only needed a point to qualify from Group D, but they were dealt a blow when Claudio Marchisio was shown a straight red card just before the hour mark.
With nine minutes left to play, Diego Godin scored from a corner to give his side all three points and ensure their place in the last 16.
Here, Sports Mole takes a closer look at the events that unfolded at the Arena das Dunas.
On Target 1
On Target 5
Was the result fair?
For an hour of the match Italy were in complete control, but that all changed with Marchisio was sent off. It was a harsh decision from the referee and from that moment it only seemed a matter of time until the Uruguayans scored. Cesare Prandelli's side dominated possession for long periods, with Andrea Pirlo seeing plenty of the ball, but they were unable to turn that dominance into goals.
However, the big talking point of the match will not be Godin's match-winning goal in the closing stages, but a controversial incident involving Suarez. He appeared to lean his head into the shoulder of Chiellini, with replays showing that the defender was bitten. It is not the first time the striker has been accused of biting an opponent and if he is found guilty then today may prove to have been his final appearance at the tournament.
From the start, Italy looked to dictate the tempo and seemed happy to play for a draw. Pirlo and Marco Verratti showed their class in the midfield and effortlessly swept the ball all across the pitch. It looked as if they were heading for the result they needed until Marchisio was dismissed in the second half for a high challenge on Egidio Arevalo Rios. The 10 men initially repelled the Uruguayan threat with the Juventus centre-back trio of Leonardo Bonucci, Chiellini and Andrea Barzagli holding firm, but their hopes were shattered by Godin's winner.
From an Italian point of view, it was a poor goal to concede, with the ball heading into the net off the defender's back. Playing with a man down they struggled to respond and with Mario Balotelli also off the pitch following a knock in the first half, they lacked the firepower to save their campaign. What started as such a promising tournament for Italy, has ended in a group stage exit for the second World Cup running, and has led to Prandelli resigning as manager.
Uruguay went into the match needing all three points to qualify and they struggled to get into the match. Suarez and Edinson Cavani were not helped by a midfield that constantly squandered possession, but they did show their threat by getting in behind on a couple of occasions.
For a team that had been criticised for their defending so far in the tournament, Godin and Jose Maria Gimenez were rock solid all afternoon and made sure that Balotelli and Ciro Immobile hardly had a touch of the ball. Their task of winning the match was helped by Marchisio's red card and they certainly took the initiative. Godin's winning goal proved to be rather fortuitous, and despite not being at their best, Uruguay showed that they can grind out a big result when needed.
Sports Mole's man of the match
Diego Godin: The stand-in captain was at his best today and produced an influential performance to ensure his team made it through to the last 16. For the second game in succession he formed a solid partnership with Atletico Madrid teammate Gimenez that restricted the Italians to just one shot on target. He seems to have a knack of scoring vital goals, as shown by his league winning strike for his club last season, and he popped up when his team needed him the most. If Uruguay are to go all the way in Brazil, then Godin will surely play a vital part.
Italy will point to Marchisio's red card as the moment that saw them exit the tournament. The midfielder's challenge on Arevalo Rios certainly warranted a booking, but a sending off can be perceived as slightly harsh. Having already been reduced to 10 men, they will have been further aggrieved that Suarez was not dismissed for his coming together with Chiellini. The incident happened just moments before Uruguay's winning goal when the Azzurri were coming under intense pressure and fans will argue that his presence on the pitch made a huge difference.
It was a tough match for Marco Rodriguez to officiate. His decision to hand out a straight red card to Marchisio was debatable, but it was a risky and poor tackle from the Juventus midfielder. He was then put into a difficult situation when Suarez leaned his head into the shoulder of Chiellini. From the referee's angle it was hard to see what happened and only looking at replays afterwards can you confirm exactly what took place.
Italy: Italy will begin their Euro 2016 qualifying campaign in September with a trip to Norway.
Uruguay: The South Americans will face the winners of Group C in the last 16, who will be either Colombia or the Ivory Coast.