Canada 1-2 Morocco: Ziyech, En-Nesyri seal top spot in World Cup
The Atlas Lions, whose previous trip to the last 16 came in 1986, finished above 2018 finalists Croatia, while Belgium - ranked second in the world is out after finishing third in the group.
A tough test awaits in the next round as they compete against 2010 champions Spain on Tuesday (15:00 GMT).
Morocco went ahead after just four minutes courtesy of a goalkeeping howler from Milan Borjan.
The Canada keeper sprinted out of his goal but passed the ball straight to Hakim Ziyech, who lofted an excellent finish into an open net from 30 yards.
The north African side doubled their advantage through Youssef En-Nesyri's well-taken goal as he controlled Achraf Hakimi's superb pass before firing in.
But sloppy defending gave Canada a route back into the game when West Ham's Nayef Aguerd stuck a boot out to divert the ball into his net - the 100th goal scored at this World Cup.
Knowing if they avoided defeat, they would go through, Morocco was happy to sit back and soak up pressure in the second period.
But Atiba Hutchinson came close with a header that rattled the crossbar and dropped down onto the line as Canada's campaign ended without a point.
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