Belgium took the lead through Thomas Meunier after only four minutes and then wrapped up the victory eight minutes from time when Eden Hazard doubled their advantage, sealing the Red Devils' best-ever finish at a World Cup.
England produced an improved performance in the second half as they looked to salvage their best finish since 1966, but they ultimately fell short to end a memorable campaign in fourth place.
The likes of Harry Kane, Raheem Sterling and injury doubt Kieran Trippier were among the players to keep their place in the starting lineup as Gareth Southgate made five changes and named the youngest England XI in World Cup history.
Belgium, meanwhile, made only two changes to the team which lost to France in the semi-finals, and one of those saw Meunier return from suspension.
It took only four minutes for the full-back to mark his return with a goal, getting on the end of a sweeping team move which saw Romelu Lukaku release Nacer Chadli, who in turn played a low ball into the box which Meunier converted from close range having got the wrong side of Danny Rose.
In doing so, Meunier became the 10th different player to score for Belgium at this World Cup, equalling the all-time record for a single tournament.
It was one of a number of threatening moments from the Belgians in the opening exchanges, and it took a good reaction save from Jordan Pickford to deny Roberto Martinez's side a second goal when he stuck out a hand to keep out Kevin De Bruyne's deflected effort.
England did begin to grow into the game as the half wore on, though, and Thibaut Courtois was called into action for the first time to deny Fabian Delph before making another routine stop from Ruben Loftus-Cheek's header.
The clearest chances were falling the way of Belgium, though, and a poor touch from Lukaku saw another opportunity go begging after De Bruyne had released the Manchester United forward with an incisive through-ball.
A tame Harry Maguire header then drew another easy stop for Courtois as England recorded a third shot on target inside the opening 20 minutes - more than they managed in any of their previous four outings, although none of them succeeded in truly testing the Belgium keeper.
Southgate's side did create their first clear chance midway through the first half when Eric Dier and Sterling combined to tee up Kane invitingly, only for the England captain to snatch at his effort and drag his finish wide of the target when he should have done better.
Belgium hit back with a chance of their own as a clever corner routine found Youri Tielemans in space on the edge of the box, and his mis-hit shot sent the ball bouncing to Toby Alderweireld, who unleashed a powerful acrobatic volley which flashed narrowly over the crossbar.
It was the Red Devils who continued to look the more comfortable going into half time, but England made two changes at the break and the introductions of Jesse Lingard and Marcus Rashford in place of Rose and Sterling had a positive impact on the team.
Indeed, Lingard had a chance less than 10 minutes after the restart when Belgium were caught napping from a simple throw-in, but his volley across the face of goal flashed inches in front of Kane's outstretched foot and past the far post.
Lukaku had wasted another golden chance after being played through by De Bruyne moments before that as the striker's first touch again let him down, and his hopes of catching Kane in the Golden Boot race were ended on the hour mark when he was replaced by Dries Mertens.
England looked far more comfortable as the second half wore on, though, and they were inches away from levelling things up 20 minutes from time when a one-two between Rashford and Dier sent the latter clean through on goal, and he kept his composure to dink the ball over the onrushing Courtois.
However, just as it looked as though the ball would bounce in, Alderweireld slid across to hook it off the line, denying his Tottenham Hotspur teammate with a fine piece of defending.
Dier had another sight of goal shortly afterwards when his header from Lingard's cross bounced wide of the target, and Maguire was also unable to test Courtois with a headed chance of his own just a minute later having once again got on the end of a Trippier delivery.
The game began to open up as England committed more men forward in search of an equaliser, and Belgium almost took advantage on the break with 10 minutes remaining when a slick counter-attack ended with Meunier hammering a sweetly-struck volley towards goal which forced Pickford in the latest of a growing list of impressive saves at this World Cup.
It proved to only be a temporary reprieve, though, and Belgium wrapped up their historic victory in the 82nd minute when De Bruyne slid the ball through for Hazard, who darted across Phil Jones before firing his finish past Pickford at the near post.
There was no time for England to respond as their best World Cup campaign for 28 years ended with back-to-back defeats, although a fourth-place finish still exceeded all pre-tournament expectations for Southgate's side.
Belgium's class of 2018 are now officially their nation's best ever, meanwhile, as they finish third at the World Cup for the first time in their history.
BELGIUM (3-4-2-1): Courtois; Alderweireld, Kompany, Vertonghen; Meunier, Tielemans (Dembele 78'), Witsel, Chadli (Vermaelen 39'); De Bruyne, Hazard; Lukaku (Mertens 60')
ENGLAND (3-1-4-2): Pickford; Jones, Stones, Maguire; Dier; Trippier, Loftus-Cheek (Alli 84'), Delph, Rose (Lingard 46'); Kane, Sterling (Rashford 46')