Great Britain will meet South Korea in Cardiff on Saturday after beating Uruguay to finish top of Group A.
Daniel Sturridge converted from close range on the stroke of half-time to score the only goal of the game.
Uruguay responded after the break but GB keeper Jack Butland made two brilliant saves to deny Liverpool striker Luis Suarez.
Sturridge almost snatched a second late on but his shot was saved before Uruguay's Gaston Ramirez hit the bar.
Ramirez's thunderous strike capped a frustrating night for the South American team, who go home with just a solitary win over the UAE to show for their efforts.
Men's quarter-final line-up
- Japan v Egypt (Old Trafford)
- Mexico v Senegal (Wembley)
- Brazil v Honduras (St James' Park)
- GB v South Korea (Millennium Stadium)
Oscar Tabarez's side came into the tournament as one of the fancied teams, boasting the highly rated strikeforce of Suarez and Napoli's Edinson Cavani.
But neither of them found the net during the Games and La Celeste, playing in the Olympic football tournament for the first time since 1928, join Spain as a fancied side failing to qualify from the group stage.
The result ensures the GB men's team repeat the feat of the women in reaching the last eight of the football tournament.
And if Stuart Pearce's team can defeat South Korea when they return to Cardiff on Saturday then they will reach the last four and be guaranteed a bronze medal match at the very least.
GB have now won back-to-back fixtures following Sunday's 3-1 victory against the UAE at Wembley, although with the fixtures coming thick and fast Pearce opted to make changes for Wednesday's match.
Skipper Ryan Giggs, James Tomkins and Marvin Sordell all dropped to the bench, with Craig Bellamy named skipper in the city of his birth.
"It was not a great game but there are so many positives. Undefeated in the group, a first clean sheet and they got the job done. The understanding was there and they cruised to victory. I think the last half hour showed just how far they have come. Anything can happen."
He was one of four Welsh players in the starting XI and might have capped the occasion with a goal but the Liverpool forward could not quite make decisive contact after Uruguay failed to clear a corner.
However, it was fellow Welshman Aaron Ramsey who was GB's most influential player and he almost created a goal with a low ball drilled across the face of goal but no-one was on hand provide the finishing touch.
Uruguay, who knew they needed to win to progress to the knockout stage, struggled to find much attacking fluency in the first half.
Liverpool defender Sebastian Coates headed over from a free-kick, Ramirez shot wide from distance and Micah Richards, back in the centre of defence after playing at full-back against the UAE, blocked a strike from Suarez.
But that was all they had to show for their first-half endeavour and the visitors were punished when Sturridge scored his second in as many games.
The goal owed much to Swansea's Joe Allen, whose clever run to collect Scott Sinclair's pass was equalled by his low ball into a dangerous area, where Sturridge was on hand to strike.
The Chelsea forward hit the woodwork from close range after Sinclair headed a Bellamy cross back across goal immediately after the restart, but the flag was raised and spared Sturridge's blushes.
Eventually Uruguay started to show some of the incision that had taken their full senior team to the last four of the 2010 World Cup - but they could find no way past 19-year-old keeper Butland.
The slippery Suarez eluded Steven Caulker and closed in on goal but his initial shot was saved by Butland, who also gathered in the striker's second attempt.
Suarez was later played in by Cavani but the GB keeper made a brilliant one-handed save to thwart the Uruguay skipper.
After Sturridge was denied by Martin Campana, Ramirez finally defeated Butland but his 18-yard strike hit the crossbar.
In the other Group A match, Senegal drew 1-1 with UAE meaning the west African side qualified and will meet Mexico at Wembley.