The match ended with both sides reduced to ten men as the full moon in Beijing seemed to have an effect on one of the most incident-packed games of the tournament.
Italy began the contest in lively fashion with their diminutive creator, Sebastian Giovinco, leading the way. After six minutes, the pint-sized Juventus gem cut inside the penalty area after a cross from Riccardo Montolivo, but he could only push a seemingly simple tap-in the wrong side of the near post.
Robert Acquafresca was next to look dangerous for the Italians, glancing his header just the wrong side of Logan Bailly's far post. The pressure was mounting on the Belgian back-line, and on 17 minutes they suffered a significant double blow.
Thomas Vermaelen was sent off for hauling down Acquafresca in the area, and the referee promptly pointed to the spot. Giuseppe Rossi stepped up to cheekily poke home the resulting penalty and suddenly the Belgians found themselves a goal - and a man - down.
But far from demoralising the re-clad Europeans, the moment of dual hardship acted as a spur. After 24 minutes, Moussa Dembele drew them level controversially with his head. Luca Cigarini scrambled and looked to have cleared off the line, but the assistant referee raised his flag to indicate the ball had crossed the line and the man in the middle promptly pointed to the centre circle to indicate a goal. There was little in the way of Italian remonstration.
Giovinco was made to rue missing a one-on-one chance with the keeper with the half winding down as the ten-man Belgians went in front one minute into first-half stoppage time. Kevin Mirallas turned brilliantly in the box to elude his marker and hit a trickler past the wrong-footed Emiliano Viviano.
Italy were trying desperately to get back into the game in the early stages of the second period. They had the ball in the net on 53 minutes, but it was judged that Rossi was in an offside position in the build-up.
With just over 20 minutes remaining, Belgium were forced to replace their first-choice goalkeeper. Bailly injured his shoulder after falling to the ground in a coming-together with Rossi, and his understudy Yves Ma-Kalambay entered the fray.
Only five minutes after coming on, the new man was forced to face down a Rossi spot-kick after Sepp De Roover was judged to have fouled Paolo De Ceglie in the area. The Villarreal forward made no mistake with his second penalty of the day, dispatching after a stutter-step to level the score.
The Belgians, undeterred by the set-back, raced straight back up the field and took the lead for the last time, once again through Dembele. After a neat give-and-go with substitute Anthony Vanden Borre, the striker slammed home low and hard from 18 yards in the 79th minute to send the Belgian fans into wild celebrations.
Viviano, who should've done better with his attempt at saving the goal, was sent off in a tussle with Mirallas as he tried to retrieve the ball and re-start the game.
With the sides even at ten men apiece, Belgium were able to survive the remainder of regular time and five minutes of stoppage time unscathed and will now meet Nigeria in the last four in Shanghai on 19 August, while Pierluigi Casiraghi's men make a shock early exit.
Italy: Viviano, Motta (Consigli 82), Bocchetti, Criscito, De Ceglie, Cigarini (Abate 61) (Candreva 83), Montolivo, Nocerino, Rossi, Giovinco, Acquafresca.
Pierluigi Casiraghi (Italy coach): "The result was disappointing but this is the Olympics. The players played hard so whatever the result was, they left the pitch with their heads held high. We were not brilliant as usual and our opponents had the bulk of possession. Belgium pressed hard and they were the better team on the night. The players are sad and I am responsible for the defeat. I have no idea what is my future even after I have worked with the team for over one year."
Saturday August 16
Brazil 2-0 Cameroon (AET)
Italy 2-3 Belgium
Argentina 2-1 Netherlands (AET)
Nigeria 2-0 Ivory Coast