Italy will miss out on a second successive World Cup after Aleksandar Trajkovski's stoppage-time strike gave North Macedonia a sensational 1-0 victory at Renzo Barbera.
Having also failed to qualify for the 2018 tournament in Russia, the European champions will not go for glory in Qatar this year after suffering their first World Cup qualifying defeat on home soil.
Roberto Mancini's side dominated the game, but they were made to pay for their lack of a cutting edge in a dramatic finale.
Trajkovski was North Macedonia’s hero, beating Gianluigi Donnarumma from 25 years in the second minute of stoppage time set up a showdown with Portugal for a place in the World Cup.