A strong start against Czech Republic and a huge win over Cuba had seen Sweden safely through to the Main Round with a game to spare, but losing the battle for top spot in Group G means they will only carry two points into the next phase, instead of a maximum four.
To add to Blagult frustrations, they got off to the better start in Stuttgart, with four players getting on the scoresheet early as Sweden took a 4-1 lead, before Linn Blohm's second of the match made it 6-2 - the first of seven four-goal leads they held in the first half.
But not only could Tomas Axner's side not extend the advantage further at any point, they allowed Brazil to close the gap to one at the break, as Gabriela Bitolo's buzzer-beater made it 16-15 to the European side after 30 minutes.
To make matters worse, Sweden lost Anna Lagerquist to injury and conceded the first two goals of the second half, with Bruna de Paula playing her part as Brazil took the lead for the first time.
In the 44th minute, Thuringer's Giulia Guarieiro struck to give the South American's their first two-goal advantage at 22-20, but Sweden did not let them pull clear, as the sides traded goals for the next 13 minutes, before Jamina Roberts made it a one-goal game with 03:11 to play.
However, Sweden could not muster a late turnaround, as Jessica Quintino, De Paula and Guarieiro scored the final three goals of the match, giving Brazil a 31-27 victory and first place in Group G.
Mariane Fernandes top scored for Brazil with six goals, though Clara Lerby's seven was the most in the match.
The Czechs beat Cuba in their final match to progress, and all three now head to Dortmund, where they will be in Main Round Group 4, taking on Norway, Angola and South Korea. Sweden's first match will be an all-Scandinavian derby against Norway on Wednesday.
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