The sky-blue-shirted team beat Latin American rivals Mexico 1-0 thanks to a well-made and perfectly-taken 43rd minute headed goal by Luis Suarez.
For coach Oscar Tavarez, it was also a personal triumph as he was in charge of Uruguay, the champions of 1930 and 1950, when they last reached the final 16 in Italy in 1990.
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Suarez's strike for his first goal at these finals settled the outcome of a tightly contested game that ensured Uruguay qualified as the Group A winners ahead of the Central Americans.
This means they will avoid probable Group B winners and South American neighbours Argentina and face likely runners-up South Korea or Greece in Port Elizabeth on Saturday.
Despite losing, Mexico also went through by virtue of having a better goal difference than hosts South Africa. France finished bottom.
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"We're going to take it one game at a time... now we've been lucky enough to achieve our first goal which was to get through the group phase," said man-of-the-match Suarez.
Coach Tabarez stayed calm amid the clamour.
TOUGH
"We showed we are a tough side to tackle now and, if you look at our history in the past few World Cups, you will know why I am extremely satisfied with this result," he said.
"It was a tough game, but we were better in the first half. I have no idea how far we can go - the reality is on the pitch - and I get more satisfaction from the team display than any personal achievement."
His team, mixing South American steel with pace and panache, deserved to win after surviving spells of flamboyant Mexican possession play in the opening half to stamp their authority on the game.
When Mexico, invigorated by three substitutions early in the second period, raised their tempo, the Uruguayan defence worked stubbornly, and rode their luck, to hang on.
It was Uruguay's first win over the Mexicans in four games since beating them 2-0 in Chicago in 2003, and only their fourth overall in 18 meetings - little wonder that supporters of the team known as "La Celeste" were singing into the night sky long after Mexico had left the field.
Mexico embroidered a generally open and entertaining game with plenty of intricate passing and some excellent individual moments, but could have little complaint at the final result.
They are now likely to face Argentina in Johannesburg on Sunday and will need to raise their game considerably to keep alive any hope of reaching the quarter-finals for a third time.
"We have to get better whatever happens... in terms of what lies ahead, everything is down to us and we have to continue with the good
