Manchester City crashed from the World Cup Club when Hilal already took a beautiful 4-3 victory in extra time from a pulsating last 16 match in Orlando.
Marcos Leonardo took his second goal with 112 minutes on the clock while the Saudi -Arab side produced a large upset.
Bernardo Silva gave the city a lead in the ninth minute, but the side of Pep Guardiola was punished for missing a series of opportunities when Leonardo and ex-Barcelona wing player Malcom replied after the break.
Erling Haaland sent the game to extra time, but City needed another equalizer of Phil Foden after former Chelsea defender Kalidou Koulibaly already led Hilal ahead again.
City, who was repeatedly caught during the break, was reversed again when Leonardo had the last word, and the Saudi side will now play Fluminense for a place in the semi -final after the Brazilian side inter -Milan shocked in the last 16.
The defeat of the city ended in hope for a potential all-English semi-final meeting against Chelsea, where the blues in Philadelphia are going on against Brazilian Zijpalmeiras (kick-off on Saturday at 2 am UK time).
How city was stunned by Al Hilal
Guardiola, who took the competition seriously, will restore a wasteing first half display while his side quickly started with Ruben Dias who was entitled to ex-Sevilla goalkeeper Yassine Bounou on his way.
The opening goal soon came, although it turned out to be very controversial with complaints of handball against Rayan Ait-Nouri and Ilkay Gundogan, before Silva stuck along Bounou.
City should have extended their lead for the break, but Bounou denied Savinho, Gundogan, Josko Gvardiol and Jeremy Doku.
City was then punished for their dissolute when Hilal struck twice in the first seven minutes of the second half.
The equalizer came when the former Stadsfull-Back Joao Ancanneo rode in a low cross, city goalkeeper Edererson pushed away and the attempt by Malcom was blocked on the rebound, but the ball rose for Leonardo to go inside.
A little later City was stabbed again when Hilal quickly recycled the ball from a corner that they defended before Malcom broke from the halfway and buried a low shot in the far corner in the 52nd minute.
But City was only the same three minutes later when Silva's Corner led to a Target Mouth and Haaland from close range to level, but far from sinking nerves, the Premier League side remained vulnerable.
Malcom was brought down by Dias for what seemed like a certain fine, only for an offside flag to save the city. It also took a good recovery equipment from Manuel Akanji to prevent Malcom from getting another shot, and Mohamed Kanno Pluised a free header.
The city was centimeters away when Akanji went against the post and the follow-up of Haaland was released from De Lijn when the game went to extra time.
City, who lost to injury, was stunned when Hilal was already living back with the powerful header of Koulibaly.
Yet the drama was far from past as Foden, after the couch came to replace another replacement in the ineffective Rodri, Beautiful Volley in a Rayan Cherki -Kruis.
Already Hilal refused to lie down and scored again when Leonardo bounced to arrange the game after Edererson had pushed a header away from Sergej Milinkovic-Savic.
Sky Sports to show 215 Live PL games next season
From next season, the Premier League coverage of Sky Sports will increase from 128 games to at least 215 games that are exclusively live.
And 80 percent of all Premier League matches broadcast on television will be on Sky Sports next season.