Venezuela's Caracas FC reached the last eight for the first time after their 4-0 romp at home to Ecuador's Deportivo Cuenca gave them a 5-2 aggregate victory.
Palmeiras, South American champions in 1999, lost 1-0 in Recife on Tuesday night but the second round tie ended 1-1 on aggregate and went to a shootout, which they won 3-1.
Wilson scored Sport's goal in the 82nd minute from a pass from the left by Luciano Henrique.
Palmeiras had Wendel sent off in the final minute for a bad tackle from behind and he will miss the first leg of their quarter-final against Uruguay's Nacional.
Nacional and Brazil's Sao Paulo were waved through to the last eight without playing after Mexican sides Guadalajara and San Luis pulled out of the tournament when the South American teams refused to travel due to fears about the H1N1 flu virus.
Caracas will meet either Gremio of Brazil or Universidad de San Martin of Peru. Gremio lead the tie 3-1 after winning the first leg in Lima.
Former Argentina playmaker Juan Roman Riquelme will miss the first leg of Boca Juniors' tie away to Defensor Sporting of Uruguay on Thursday after the recurrence of a foot injury that has kept him out of action since early April.
Riquelme helped Boca win their sixth Libertadores Cup in 2007 after returning home from Europe.
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