Harry Kewell's late strike sent Australia through to the second round after a thrilling Group F decider.
Kewell celebrates his crucial equaliser for Australia
Darijo Srna's precise free-kick gave Croatia an early lead.
Australia were level through Craig Moore's penalty after Stjepan Tomas handled a cross, but Croatia hit back through Nico Kovac's bobbling drive.
Kewell was on hand to fire home from close range to send the Socceroos through, while Dario Simic, Brett Emerton and Josip Simunic all saw red.
Australia's draw sets up a second-round clash with Group E winners Italy as Japan failed to overhaul group winners Brazil.
The Socceroos surprisingly opted to leave out first-choice goalkeeper Mark Schwarzer in favour of the taller Zeljko Kalac.
And the replacement keeper's first touch was to pick the ball out of the net after Srna's bending set piece caught him out.
Mark Viduka's mistimed lunge on Nico Kovac on the edge of the area brought about the free-kick and Srna sweetly dispatched Croatia's first goal of the tournament.
Nico Kovac reacts to Croatia's exit from the World Cup
But far from being rocked by the early setback, the Australians pressed forward and took control of possession.
And Viduka almost made up for his error when he burst through on goal, but he was left fuming when Josip Simunic appeared to have wrestled the Middlesbrough striker to the ground.
Kewell and Tim Cahill both went close with long-range efforts as the Socceroos camped inside the Croatian half.
And they were rewarded for their endeavour on 38 minutes when Tomas' moment of madness handed Australia a penalty.
Tomas rose to deal with an in-swinging cross and his outstretched arm just clipped the ball which was cleverly spotted by English referee Graham Poll.
Newcastle defender Moore stepped up to coolly slot home the resulting spot-kick.
Dado Prso wasted a decent chance to put Croatia back ahead but blasted over a close-range effort, and it was the Aussies who would have been the most satisfied going in level at the break.
Ten minutes after the interval Australia returned the favour for Tomas' earlier kindness when the unimpressive Kalac misread Kovac's tame drive, allowing the ball to hop over him into his net.
Graham Poll sends off Josip Simunic after the full-time whistle
With Australia streaming forward for the vital equaliser the game became stretched and Kewell took advantage of some space, forcing an instinctive reflex save from Stipe Pletikosa.
And moments later the keeper bravely threw himself underneath two Australian challenges to heroically keep Aloisi out.
But he was helpless to prevent the Australia equaliser as Kewell, who looked to be in an offside position, turned home John Aloisi's flick from Marco Bresciano's in-swinging cross.
Simic and Emerton were both dismissed for two bookable offences in the final 10 minutes, while Simunic, who received a second caution, was mistakenly not shown a red by referee Poll.
To add to the drama, Cahill had a goal disallowed as Poll had already blown for full time and as Simunic complained, the referee handed him his third yellow of the match and an overdue red card.
Croatia: Pletikosa, Simic, Tudor, Tomas (Klasnic 84), Simunic, Srna, Nico Kovac, Babic, Kranjcar (Jerko Leko 65), Prso, Olic (Modric 73).
Subs Not Used: Balaban, Bosnjak, Butina, Didulica, Ivan Leko, Seric, Tokic, Vranjes.
Sent Off: Simic (85), Simunic (90).
Booked: Simic, Tudor, Simunic, Pletikosa.
Goals: Srna 3, Nico Kovac 56.
Australia: Kalac, Neill, Moore, Chipperfield (Kennedy 75), Emerton, Grella (Aloisi 63), Culina, Cahill, Sterjovski (Bresciano 71), Kewell, Viduka.
Subs Not Used: Beauchamp, Covic, Lazaridis, Milligan, Popovic, Schwarzer, Skoko, Thompson, Wilkshire.
Sent Off: Emerton (87).
Goals: Moore 39 pen, Kewell 79.
Ref: Graham Poll (England).
Fifa man of the match: Harry Kewell
Australia progress from the group stages of a World Cup for the first time, while coach Guus Hiddink has successfully negotiated the first round group phase for the third time. In 1998 and 2002 he reached the semi-finals with the Netherlands and South Korea. Only seven trainers have reached the same milestone, with Helmut Schon and Bora Milutinovic the record holders, having progressed on four occasions.
Croatia-Australia was only the fourth match in the history of the World Cup with three red cards. Dario Simic and Josep Simunic (both Croatia) and Brett Emerton (Australia) were all dismissed. Emerton will be suspended for Australia's second round match against Italy. Dario Simic received his fourth and fifth career yellow cards at the World Cup, equalling the record held by Lothar Matthaus, Eddie Pope and Cafu.
Darijo Srna's opening goal was Croatia's first in four World Cup matches, since Milan Rapaic's winner against Italy on 8 June 2002 in a group phase match.
Trivia stats source: Infostrada Sports