Colon, down to 10 men from the 69th minute, were beaten 3-2 away by Universidad Catolica in the second leg of their preliminary-round tie on Tuesday. The aggregate score was 5-5 with Catolica winning 5-3 on penalties.
The Chilean side went through to Group Eight where they will meet arch-rivals Universidad de Chile, Brazilian champions Flamengo and FC Caracas of Venezuela.
Catolica were 1-0 up at half-time after defender David Henriquez headed them in front in the 40th minute.
Colon hit two quick goals early in the second half through midfielder Ivan Moreno y Fabianesi and 37-year-old former Derby County, RC Lens and Universidad Catolica striker Esteban Fuertes, who scored from a penalty, to go 2-1 up.
Midfielder Milovan Mirosevic had a penalty for the home side saved by keeper Diego Pozo in the 67th minute but two minutes later Colon's Paraguayan defender Salustiano Candia was sent off for a second bookable offence.
Catolica, who should have wrapped up the tie earlier given their superiority, levelled it in the final quarter of an hour with a free kick by midfielder Rodrigo Toloza and a tap-in by striker Juan Jose Morales after Pozo lost the ball.
"Logically, the key moment was Candia's dismissal, which limited Colon to retreating into defence," Catolica coach Marco Antonio Figueroa told reporters.
Lanus lost to Libertad of Paraguay in the opening Group Four match in Buenos Aires, while Paraguayan champions Nacional were beaten 2-0 at home in Asuncion by Once Caldas of Colombia in Group Two.
Uruguay's Cerro also won 2-0 against Ecuadorean champions Deportivo Quito in Group Five.
