Two second-half goals from Evidence Makgopa and Teboho Mokoena made the difference with Achraf Hakimi also missing a crucial penalty to go level.
The North Africans, touted as tournament favourites became the latest major casualty 24 hours after defending champions, Senegal, were also dumped out.
Makgopa gave South Africa the lead just before the hour mark in the Ivorian coastal city of San-Pedro, but Morocco had the chance to draw level five minutes from time from the penalty spot.
Paris Saint-Germain star Hakimi then squandered an opportunity to tie up the game, sending his kick off the top of the bar and over before Morocco’s misery was compounded as Sofyan Amrabat was sent off in stoppage time and Mokoena scored South Africa’s second from the resulting free-kick.
Bafana Bafana go through to a quarter-final on Saturday in Yamoussokro against tiny Cape Verde, who have been one of the surprise packages of the tournament so far.
But Morocco, World Cup semi-finalists in 2022, add to an ever-growing list of the continent’s biggest names to have been knocked out of this Cup of Nations, 24 hours after champions Senegal were eliminated on penalties by hosts Ivory Coast.
Africa’s top-ranked side were hoping to follow up their remarkable run to the last four in Qatar just over a year ago by winning their second AFCON title, 48 years after their first.
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