Derlis Gonzalez was Paraguay's spot-kick hero as they earned a shootout victory over Brazil in Concepcion to set up a Copa America semifinal showdown with Argentina in three days' time.
Robinho gave Brazil an early lead but Paraguay deservedly drew level late in the second half when Gonzalez fired home from the penalty spot as the final quarterfinal encounter finished 1-1 in normal time.
Paraguay won a shootout to eliminate Brazil from the Copa America quarterfinals in La Plata four years ago and history repeated itself as, after Everton Ribeiro and Douglas Costa missed for Brazil, Gonzalez held his nerve to send Paraguay through to the last four.
Paraguay, two-time Copa America winners, return to the Estadio Municipal de Concepcion on Tuesday to play Gerardo Martino's Argentina for a place in the July 4 final in Santiago.
Phillippe Coutinho tested Justo Villar with a long-range effort inside 90 seconds but the veteran goalkeeper set himself early and punched the ball to safety.
Brazil's hopes had been dented by Neymar's tournament-ending ban last week but Robinho, the leading scorer when Brazil won the 2007 Copa America in Venezuela, settled any early nerves when he gave them the lead in the 15th minute.
Paraguay were robbed of possession deep in their own half and the AC Milan striker glided into the area undetected and side-footed Dani Alves' right-wing cross beyond Villar and into the back of the net.
Paraguay recovered from the early setback and Roque Santa Cruz showed quick feet to create space on the edge of the penalty area but his low shot, although powerfully struck, was always going wide of Jefferson's left post.
Neither side could fashion any further clear-cut chances before the half-time interval but Paraguay dominated the early second-half exchanges and defender Paulo da Silva drew a smart save from Jefferson when he rose highest to meet a Gonzalez corner shortly before the hour mark.
Brazil were content to sit back and defend their lead and their lack of adventure came back to haunt them 18 minutes from time when Paraguay were awarded a penalty.
Referee Andres Cunha pointed to the spot when Thiago Silva handled in the area and Gonzalez finished emphatically from 12 yards to deservedly draw Paraguay level.
Brazil showed greater enterprise after relinquishing their lead but could not unlock Paraguay's well organised defence and so penalties ensued.
Brazil missed all four goals in their shootout defeat four years ago and, after Ribeiro and Costa missed their spot kicks, Gonzalez made no mistake to send Paraguay into the semifinals.