Brazil failed to hit the heights at altitude in La Paz and now need to beat Venezuela next week to reach the 2002 World Cup finals.
This 3-1 defeat saw them outclassed by Bolivia at the mountainous home venue that always gives the Bolivians an advantage.
Colombia could get past Brazil to reach the finals and condemn Luiz Felipe Scolari's team to a nerve-shredding play-off with Australia if they beat Paraguay - in a meaningless game after Paraguay qualified last night - and Uruguay fail to beat Argentina.
It is now quite feasible that Scolari's team could need extra games against the Australians later this month to get to Korea and Japan and anything other than a win next week could prove catastrophic.
Venezuela are bottom of the group and have nothing to play for but Brazilian nerves will be tested on the 14th.
Scolari will be replaced by Carlos Alberto Parreira even if he succeeds next week but the coach took his team to one of the toughest venues in world footbal with only hour to prepare for the height and thin air in La Paz and the home team took full advantage.
But Brazil did take the lead in the 25th minute with a high drive from Edilson but Scolari's team tired visibly in the second half with Lider Paz equalising before half time to set up two goals from Julio Baldivieso in the second half.
Rivaldo helped to set up the Brazil goal but it fell to Edilson to smash a high shot into the top corner from outside the penalty area past Mauricio Soria.
Edilson came close again before Roque Junior slipped trying to make a clearance and allowed Paz through to hit a low finish past exposed Brazilian goalkeeper Marcos in the 41st minute.
Marcos was then defeated by a flighted free kick over his head from Baldivieso to drain the energy from the visitors.
Cafu fouled Boteron on a run into the penalty area and Baldivieso scored with his second set-piece of the game.
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