Germany crashed out of the World Cup as Paraguay pulled off a stunning upset with a 4-3 penalty shoot-out victory after a dramatic 1-1 draw at Boston Stadium.

Jonathan Tah had a goal controversially ruled out in extra time, and the defender missed the crucial penalty in sudden death, paving the way for Paraguay to claim a famous victory and move into the last 16.

Paraguay showed their intent from the get-go, with Julio Enciso leading a charge down the left and Junior Alonso forcing Manuel Neuer into action inside the opening two minutes.

And a desperately disappointing first-half display from Germany was punished in the 42nd minute, with the unmarked Enciso heading home from Matias Galarza's centre, bringing up Paraguay's first ever knockout stage goal at the World Cup in what was their sixth such match.

Julian Nagelsmann introduced Leon Goretzka for the second half, but Germany's flat performance continued, and a sloppy mistake from Joshua Kimmich almost proved costly, with Neuer thwarting Enciso.

Yet an early, drilled cross from Florian Wirtz finally created an opening, with Kai Havertz's flicking a deft header into the bottom-right corner.

Wirtz and Havertz combined again in the 77th minute, but this time, the latter directed a free header too close to Paraguay goalkeeper Orlando Gill, who reacted sharply to parry clear.

Germany's decisive breakthrough seemed to have arrived just before half-time in extra time. Nathaniel Brown delivered a brilliant inswinging corner to the back post, where Tah was on hand to head home, but after a VAR check, the referee deemed Waldemar Anton had blocked Gill, cutting short Germany's celebrations.

Jamal Musiala was perhaps fortunate to escape with just a yellow for a rash lunge on Galarza, before Anton missed a golden chance to avoid penalties when he headed at Gill from point-blank range.

Gill's heroics continued into the shoot-out, as he guessed right to palm away Havertz's weak spot-kick, with Mauricio keeping Paraguay's momentum up with a fantastic finish.

Kimmich got Germany going with a low strike into the left-hand corner, with Gustavo Gomez and Musiala exchanging successful penalties.

Galarza sent Neuer the wrong way with stunning composure, and another huge moment arrived for Gill as he lunged out to deny Nick Woltemade, only for Antonio Sanabria to skew wide.

And after Nadiem Amiri kept Germany's hopes alive, Neuer stepped up to deliver as he kept out Fabian Balbuena's attempt.

Tah, though, skied his effort way over the crossbar, and this time, Paraguay made it count – Jose Canale, a towering presence in Paraguay's defence all game – hammering his strike high into the net.

Germany get what they deserve

It is hard to see how Nagelsmann survives this. Germany won their first two games and were in with a shout of matching their record of successive wins (12), yet they were outworked and outmatched by Ecuador in their final group game, and then were shocking for large parts of this contest.

Alonso's effort, timed at 63 seconds, is the earliest shot on target Germany have faced in a World Cup match on record, and it set the tone for a generally dismal display from the European heavyweights.

They will point to that VAR controversy, of course, but they were simply not good enough. Nagelsmann bizarrely elected to start Deniz Undav over Musiala, and Germany could never really link the midfield to attack effectively.

Their only chances came from crosses, with Wirtz particularly dangerous in that regard. He will head out of the tournament having provided three assists, and he led this game for chances created (four), but it was hardly a performance for the playmaker to shout about.

Paraguay defended resolutely all game long; Germany had 21 shots but they combined for just 1.49 expected goals (xG). 

Canale, in particular, was colossal, winning all five of his tackles and making a whopping 15 clearances. No other player made more than eight.

Even so, you do not tend to back against Germany in a penalty shoot-out. 

This is the first time they have ever lost a shoot-out at the World Cup, and the inquest will now begin in earnest, as they failed to reach the last 16 for the third straight World Cup, while Paraguay can look forward to a last-16 tie against France or Sweden.