The draw was made less than an hour after South African president Jacob Zuma boldly predicted to a worldwide television audience that the trophy would be staying in Africa after the July 11 final.
The audience in Cape Town's Convention Centre gasped when 1998 winners France were drawn last in Group A.
"It is up to us to prepare as much as possible and be competitive," said coach Carlos Alberto Parreira who took charge of South Africa in October for the second time in his career in a bid to revive a team in the doldrums.
"The French play with big clubs but it doesn't mean we have to be afraid," he told reporters. "We need to have strength to make it.
"There is no easy group but ours is a big challenge. The only way to get out of this group is to prepare really well."
The tough draw not only threatens early elimination for the South Africans, it also leaves the potential for the tournament to flop if home fans lose interest.
Sepp Blatter, president of football's governing body FIFA, and local organisers have frequently spoken of their fears of 'Bafana Bafana' being knocked out early.
South Africa are the lowest-ranked of the 32 finalists at number 86.
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