Defender Ronald Araujo fired Uruguay ahead on 41 minutes before Liverpool forward Darwin Nunez made the game safe with an 87th-minute goal on the counterattack to settle a hard-fought clash at the Bombonera Stadium in Buenos Aires.
It was Lionel Messi and Argentina's first defeat of the 2026 World Cup qualifying campaign, and their first loss since they were stunned 2-1 by Saudi Arabia at the 2022 finals in Qatar.
"We never felt comfortable," Messi said after the defeat.
"They're a physical team that works well and on the counterattack they were very dangerous," added Messi, praising the work of Uruguay's revered Argentine coach Marcelo Bielsa.
"You can see his hand in the team. In all the teams or clubs he's been involved in, including Argentina, you can see his hand," said Messi.
Argentina coach Lionel Scaloni meanwhile backed his team to recover in time for next week's showdown with Brazil.
"There is a very difficult game coming up and we will try to do our best; I think this team has shown plenty of times that it can get out of difficult situations," Scaloni said.
"We lose and win as a team, and there are times when you have to give credit to the opponent," Scaloni added.
"We can't think that because we're world champions, we can't lose. We are not unbeatable -- I've said it before and will continue to say it."
Argentina, who had won all four of their opening qualifiers, remain on top of the standings with 12 points from five matches. Uruguay's win leaves them in second place on 10 points.
Diaz sinks Brazil
In other South American qualifiers, Nunez's Liverpool team-mate Diaz scored two goals in five minutes as Colombia came from behind to stun Brazil 2-1 in Barranquilla.
Diaz's dramatic double capped a roller-coaster month for the forward, whose father was taken hostage by Colombian guerrillas at the end of October before being released last week.
Diaz's father, Luis Manuel Diaz, was watching from the stands in tears as his son scored in the 75th and 79th minutes to fire Colombia to a crucial win.
Diaz's second-half double cancelled out Brazil's opener, which came from Arsenal forward Gabriel Martinelli after only four minutes.
A disappointing result for Brazil was compounded by an injury to Real Madrid star Vinicius Jr., who limped off clutching his left thigh after 27 minutes.
Diaz meanwhile said he had experienced "hard moments" after learning of his father's kidnapping in late October.
"But life makes you strong and brave and I think that's football, and not just football but life," said Diaz, dedicating his performance to Colombian compatriots.
"I'm grateful to my team-mates, to the coaching staff who were always there for me at every moment. And I dedicate the victory to the people, who deserved it."
Colombia moved up to third place after the win with nine points from five games.
In other games, Venezuela ground out a 0-0 draw with Ecuador while Bolivia moved off the bottom of the 10-team standings with their first points of the qualifiers after a 2-0 home win over Peru.
Chile and Paraguay remain outside the qualifying spots after a goalless draw in Santiago. Chile's Argentine coach Eduardo Berizzo resigned after a 0-0 draw that leaves 'La Roja' in eighth place, with five points from five games.
The top six teams of the round-robin home-and-away qualifying tournament will earn berths at the expanded 2026 World Cup taking place in the United States, Canada and Mexico, while the seventh-placed team goes into a play-off.
Source France 24
BDST: 1126 HRS, NOV 17, 2023
MSK