Brazil survived the most almighty scare against Chile before prevailing on penalties to book a place the World Cup quarter-final - where they will face Colombia who overcame England's conquerors Uruguay 2-0 in Rio de Janeiro.
In Belo Horinzonte it was former Nottingham Forest player Gonzalo Jara who missed the crucial penalty for Chile - as Brazil became the first team through to the quarter-finals of the World Cup after a thrilling shoot-out win.
Mauricio Pinilla and Alexis Sanchez also had penalties saved, before Jara missed the telling final kick.
Former Chelsea man David Luiz had given Brazil the lead when he bundled in after Thiago Silva had flicked on a Neymar corner.
Saturday's results
Brazil 1-1 Chile (Brazil won 3-2 on penalties)
Colombia 2-2 Uruguay
However, Chile equalised as Eduardo Vargas made the most of a defensive error to feed Alexis Sanchez who found the back of the net to silence the home crowd.
Brazil's Hulk also had a goal disallowed in the second half when he was adjudged to have handled the ball before scoring - as the 50,000 plus home supporters in the stadium, and a further 200 million nationwide, held their breath.
Chile were hanging on at the end although they Mauricio Pinillartruck a cracking effort against the cross bar with a minute to go.
But Brazil prevailed and held their nerve in the shoot-out to keep their dream of winning the World Cup on home soil alive.
In the day's second round of 16 tie, James Rodriguez scored twice - including a stunning contender for goal of the tournament, to send Colombia through to a quarter-final showdown with Brazil and send Uruguay out of the World Cup.
The 22-year-old Monaco midfielder was voted the player of the group stages and is rapidly becoming the star of the tournament. His two goals last night made him leading scorer with five, ahead of Neymar and Lionel Messi, and the first was simply breathtaking.
James Rodriguez celebrates his wonder goal against Uruguay
Rodriguez was 20 yards out with his back to goal when Abel Aguilar headed the ball towards him. After a quick glance over his shoulder, he controlled the ball on his chest, spun and rifled an unstoppable shot into the net off the underside of the bar.
Uruguay keeper Fernando Muslera got a fingertip to the ball but was never going to stop it, so powerful was the shot that lit up the Maracana.
And Colombia were well worth their lead. Diego Forlan replaced the suspended Luis Suarez in the Uruguay attack but he did little before being replaced early in the second half.
By then Uruguay were two goals down after another Rodriguez effort, this time a great team goal. The ball was moved from right to left before being crossed, and when the impressive Juan Cuadrado headed it back across goal, Rodriguez was on hand to half-volley home from close range.
Uruguay threatened twice from long-range, but could find no way past goalkeeper David Ospina and are now on their way back home.
Saturday's two victors will meet in Fortaleza on Friday, in what will be a mouthwatering quarter-final contest.
