Goals from Oswaldo Vizcarrondo and Gabriel Cichero put the surprise package of the tournament into their first semi-final after an amazing second half in San Juan
The Venezuelans went into the match looking to end a 10-year wait for victory over their opponents and knew a win would also hand them a first ever semi-final berth in the competition.
Coach Cesar Farias made four changes to the side that drew Wednesday’s six-goal thriller with Paraguay, as the tournament’s surprise package looked to continue their impressive form.
Chile were overwhelming favourites against Farias’ men and took the field on the back of an 11-game unbeaten run.
The opening exchanges produced little in the way of excitement as the game was littered by a frustrating catalogue of stoppages and misplaced passes.
Chile, backed by a vocal crowd, looked to current man-of-the-moment Alexis Sanchez to inject some much needed inspiration into the game, but the Barcelona target was well marshalled by a solid Venezuelan defence and became frustrated by some close marking.
The deadlock was finally broken in the 34th minute after Juan Arango whipped a dangerous free-kick into the Chilean area, and Oswaldo Vizcarrondo rose unopposed to power a thunderous header past the stranded Claudio Bravo to give Venezuela the lead.
Chile almost grabbed an equaliser on the stroke of half-time but went in at the break trailing.
Ten minutes into the second half, Chile finally showed signs of life as Sanchez went close and moments later, Humberto Suazo left the crossbar rattling with a thumping right-foot effort.
Minutes later the woodwork was again left shaking, as the impressive Jorge Valdivia tried his luck on the edge of the area.
Chile eventually sprang into life and began to push hard for a way back into the game, with the influential Sanchez and Valdivia pulling the strings.
Venezuelan resistance was finally broken two minutes later as Sanchez picked out Suazo inside the area where the Monterrey striker finished from close range to make it 1-1.
Chile began to dominate and flooded forward in search of a winner. However, the sucker punch came with 10 minutes remaining as Bravo spilled a freekick in the six-yard box, allowing Gabriel Cichero to stab home the loose ball and restore Venezuela's lead.
Chile were reduced to 10 men after Medel was shown his second yellow card and they could not find a way back into the game.
Venezuela now face an intriguing semi-final clash against Paraguay on Wednesday.