The win gives Argentina (6-0) first place in group F and the United States (5-1) plenty to think about as they prepare for quarterfinal Thursday against a highly-regarded Yugoslavia team.
Since 1992, when NBA players were allowed to represent the United States internationally, the US had gone 58-0, including three Olympic Games and two world championships.
But that streak came to a shocking halt as the Americans could not match the intensity or tempo of Argentina, who were clearly better prepared than their much-heralded opponents were.
The South Americans led by as many as 18 points in the first half and carried an imposing 53-37 lead into the intermission.
The US never led in the game, trailing 34-21 after one quarter, although the Americans did close to within six points late in the third quarter and trailed 68-60 heading into the final 10 minutes.
But Argentina didn’t panic and slowly pulled further ahead, before fending off a late American rally attempt to stun the crowd at the Conseco Fieldhouse.
Emanuel Ginobili had 15 points to lead Argentina, while Andres Noccioni added 14 points.
Luis Scola had 13 points for the winners, while Fabricio Oberto added 11 points.
In Thursday’s other quarterfinals, Argentina meet Brazil, Puerto Rico play New Zealand and Germany take on Spain.
In Wednesday’s other group F action, New Zealand (3-3) rallied from an 11-point deficit in the fourth quarter to defeat China (1-5) 94-88, knocking the Chinese out of the medal rounds.
The surprising Kiwis went on a 17-0 run early in the fourth quarter to overcome an 81-70 deficit, leaving New Zealand hoping that Germany defeated Russia to gain a berth in the quarterfinals.
Phil Jones had 33 points to lead New Zealand, while Kirk Penney had 19.
Lin Nan scored 33 points for China, while Yao Ming didn’t miss a shot while producing 27 points.
The NBA’s number one draft pick went 8-for-8 from the field and 11-for-11 from the floor.
In group E action, Spain (5-1) played tight defense and easily defeated Brazil (4-2) 84-67 at the RCA Dome.
Pau Gasol had 23 points on 10-for-13 shooting from the floor and completed the double-double with 11 rebounds.
Carlos Jimenez and Jorge Garbajosa both had 12 points for Spain.
Marcello Machado led Brazil with 25 points.
Yugoslavia (4-2), one of the pre-tournament favourites, continued its roll by defeating Turkey 110-78.
Peja Stojakovic and Milan Gurovic both scored 16 points for the winners, while Dejan Bodiroga had 12 points and seven assists.
Mehmet Okur had 21 points and nine rebounds for Turkey (2-4), which was eliminated from the medal rounds with the loss.
Hedo Turkoglu added 20 points for the losers.
Germany (4-2) advanced to the medal round with a convincing 103-85 win over Russia (2-4).
The Germans roared in front 20-3 and never relinquished the lead, knocking the disappointing Russians out of the medal hunt.
Dirk Nowitzki had 17 points to lead Germany, even though he didn’t play in the fourth quarter.
Three other Germans were in double-figures to spark their balanced attack.
Zakhar Pachoutine had 28 points for Russia, 25 of those coming in the second half.
In the final game of the night, Puerto Rico needed double overtime to defeat Angola 89-87.—Reuters