Chile star Marcelo Salas returned from suspension to make two goals and score a third as his team hammered Brazil 3-0.
The defeat for Brazil - only their third ever in World Cup qualifiers - pours the pressure back onto coach Wanderley Luxemburgo.
This was the second away game in a row that Luxemburgo's team have played poorly and lost and the optimism created by the win over CONMEBOL leaders Argentina late last month will vanish after this result.
Brazil's media are already gearing up again for more attacks on the coach and he has no support from angry fans.
Two defeats in three matches for Brazil are bound to make the nervous CAF look at ways to dump the coach but Brazil's actual performance in the match was a big improvement on their dismal showing in Paraguay last month.
Chile took their chances well but the match added to the impression that while Brazil can still pass they have few options in attack to take the pressure off a defence that is not strong in its centre.
The home team thrilled the Santiago fans by taking three of only four chances created and were forced to defend for long spells.
Salas created the incisive attacking play which Brazil lacked and he flicked the ball over a defender to turn his marker in the 25th minute to set up the first goal with a run into the penalty area and cross to the far post for Fabian Estay to bring down the pass and slot in a right foot shot.
The SS Lazio forward was at it again in the 44th minute when he robbed Antonio Carlos and drove low across goal for Ivan Zamorano to steer the ball in.
It was revealed after the game that Salas is suffering from a thigh injury that could see him miss next month's Olympics but his 73rd minute finish belied any serious pain as he brought a ball down with his chest and slammed the ball high into the net to complete the scoring.
Luxemburgo recalled Luizao to lead the attack but he missed from in front of goal and substitute Marques missed a completely open goal when Tapia went walkabout late on.
No South American World Cup match is complete without some violence and Emerson was lucky to stay on the pitch after a crushing tackle from behind and Chile had David Pizarro red carded for hitting Roberto Carlos in the 89th minute.
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