The Americans, chasing a record-extending fifth title, dominated the 120 minutes at the Melbourne Rectangular Stadium in front of a crowd of 27,707 but were denied a quarter-final place by a formidable goalkeeping display from Zećira Mušović.

In the shootout, Lina Hurtig scored the decisive penalty following US misses from Megan Rapinoe, Sophia Smith, and finally Kelly O'Hara.

Chelsea goalkeeper Mušović made 11 saves in the match where Vlatko Andonovski's side looked more like the team that triumphed four years ago than the one that scraped through the group stage.

They enjoyed 58 per cent of the possession and 22 shots, at the same time limiting the Swedes to just one shot on target.

Sweden's victory was confirmed when referee Stéphanie Frappart checked with the video assistant referee and ruled that Hurtig's penalty had crossed the line, despite Alyssa Naeher pushing the ball up and away from goal.

The result marks America's worst performance at the FIFA Women's World Cup as they had never previously failed to reach the semi-finals.

It also served as veteran winger Megan Rapinoe's final appearance for the national side in a tournament marked by controversy following a decision by the majority of the US side not to sing during the national anthem or putting their hands on their hearts. 

The 38-year-old has amassed 63 goals in 202 matches for the US and was part of the London 2012 Olympic gold-medal winning side and the triumphant 2019 and 2015 Women's World Cup teams.

Rapinoe was left crying along with her team-mates after being knocked out, but there was criticism back home after she appeared to laugh after missing her penalty.

"This is dark comedy," she told US broadcaster Fox at the end.

"I missed a penalty.

"This is the balance to the beautiful side of the game."

There was no doubt, though, that player of the match was the 27-year-old Mušović. 

"I had a really good feeling before the game, there was a good feeling about the squad," she said.

"To be able in that way, it takes a lot of hard work that nobody sees.

"The reason I am a goalkeeper is to give our team the best chance to win the game.

"You just do what you do, it feels natural."

Sweden are now for another daunting task as they play 2011 champions Japan next in the quarter-finals on Friday (August 11).

The Netherlands are due to meet Spain, also on the same day, following their 2-0 win over South Africa.

Manchester City club record signing Jill Roord headed the Dutch in front after just nine minutes at the Sydney Football Stadium in front of 40,233. 

The £300,000 ($380,000/€350,000) player found the net from close range before Lineth Beerensteyn doubled the advantage after the 68th minute thanks to a mistake from goalkeeper Kaylin Swart.

The Netherlands will have to face Spain without experienced midfielder Danielle van de Donk, who picked a second yellow card and received a suspension.

She was in tears at full-time knowing she would miss the quarter-final after starting all 15 Women's World Cup games in the country's history.