Bolivia took full advantage as Carlos Saucedo smashed home an impressive hat-trick.
Gualberto Mojica added a fourth before Liverpool striker Luis Suarez grabbed a consolation in the closing stages.
Tabarez insisted that his team need to focus on improving quickly to resurrect their qualifying campaign instead of dwelling on a third consecutive defeat.
"Bolivia were very good and deserved to win, we have to get out of this situation and we need to work hard on the solution," he said.
"Obviously things are not good for us at the moment, it is not something we are used to for we have enjoyed some great moments together.
"What we need to do now is to work on ensuring we make the finals by being in the top five when qualifying is over."
Uruguay are now eight points behind South American table-toppers Argentina after nine group matches.