The United States' long reign as Women's World Cup holders was brought to an end in the most dramatic fashion as they were dumped out on penalties by Sweden, who joined the Netherlands in reaching the quarter-finals on Sunday.

Sweden face Japan in the last eight as the drama and shocks just kept coming at the tournament in Australia and New Zealand. The Netherlands beat South Africa 2-0 and meet Spain.

Their last-16 defeat after the game ended 0-0 after 120 minutes was the United States' earliest exit in their Women's World Cup history and leaves European champions England now the firm favourites.

"Just devastated, feels like a bad dream," veteran striker Alex Morgan, for so many years one of the faces of the all-conquering Americans, told Fox Sports.

The USA have long been the dominant force in international women's football: they have won the World Cup four times and were chasing an unprecedented third title in a row.

Vlatko Andonovski's side were the better team against Sweden in Melbourne but they could not beat goalkeeper Zecira Musovic and then lost their nerve in the penalty shootout.

Megan Rapinoe, a two-time World Cup winner who was desperate to end her career with another title, missed her spot-kick before the Swedes sealed the deal 5-4 on sudden-death penalties.

Even then the end was excruciatingly tense. US goalkeeper Alyssa Naeher thought she had saved Lina Hurtig's kick but VAR ruled it had just crossed the line.

Cue belated pandemonium among the Sweden squad and tears for the Americans who, despite dominating large periods of the game, just never got going at this World Cup.

They were held 1-1 by the Netherlands in the group phase in a rerun of the 2019 final and likewise 0-0 by debutants Portugal, meaning they squeezed into the last 16.

"This team was a really special team, I just feel like everyone just got along really well," added Morgan.

"It's a tough one to swallow."

Sweden next face a Japan team who have been the sensation of the tournament so far. The 2011 champions eased into the last eight with a 3-1 win over Norway on Saturday.

England face Nigeria in Brisbane on Monday hoping to avoid another shock, before co-hosts Australia face Denmark in Sydney.

Earlier Sunday, the Netherlands secured their spot in the quarter-finals by ending South Africa's historic run.

The Dutch, runners-up in 2019, suffered some anxious moments in front of 40,000 fans in Sydney and had goalkeeper Daphne van Domselaar to thank for making several big saves in the first half.

Jill Roord scored after nine minutes to put the Dutch on their way against a team that sits 45 places below them in the world rankings and was featuring in the knockout rounds for the first time.

South Africa goalkeeper Kaylin Swart then made a mess of an innocuous Lineth Beerensteyn shot midway through the second half to gift the Dutch a second.

The African champions will be kicking themselves after having numerous chances in the opening 45 minutes, almost all of them falling to their livewire captain Thembi Kgatlana.

"Daphne saved us a few times and I was happy to lead 1-0 at half-time," said Dutch coach Andries Jonker.

"We did much better in the second half and had much more control of the game.

"We deserved to score again and in the end deserved to win."

His team will now return to New Zealand for Friday's last-eight game in Wellington against Spain, who outclassed Switzerland 5-1 on Saturday.

South Africa coach Desiree Ellis was proud but felt her side should have won.

"We had a lot of chances, especially in the first half, to kill off the game," she said.

"The chances we created should have put us out of sight."