Although the eyes of 200 million Brazilians were fixed on an evening final between the hosts and world champions Spain, Italian and Uruguayan fans converged on the northern city for the bronze medal which Italy carried off after skipper Gianluigi Buffon saved spot-kicks from Diego Forlan, Martin Caceres and Walter Gargano.
Despite the early afternoon heat both sides turned in an entertaining contest as the Italians, edged out in the semi-finals by Spain - also on penalties - came past rivals who had bowed to the Brazilians in their semi.
Alessandro Diamanti looked to have won the game in normal time at the Arena Fonte Nova stadium when he swept in a curling free-kick just inside Uruguay keeper Fernando Muslera's left-hand post in the 73rd minute.
But Edinson Cavani crashed in a stunning free-kick of his own with 12 minutes remaining of normal time to level at 2-2 as the South Americans fought to end a poor run of six losses in seven bronze medal matches at World Cup, Copa America and Confederations Cup tournaments.
The extra half hour could not separate the sides and so the 12-yard test decided the contest. Forlan - who also missed in the semi against Brazil - fluffed the first kick and though Cavani and Luis Suarez netted it was not enough as Alberto Aquilani, Stephan El Shaarawy and Emanuele Giaccherini found the net.
In a contest between countries who shared out the first four World Cups Italy, who have since netted two more, drew first blood on 24 minutes when Davide Astori poked in from point blank range after Muslera had deflected another dangerous Diamanti free-kick onto the woodwork.
But Uruguay were level just before the hour mark with a neat Cavani strike on the run, the Napoli forward stroking a left-footer low past Buffon. Cavani had already by that stage seen a firm header chalked off for offside.
Italy coach Cesare Prandelli, having lost striker Mario Balotelli to injury earlier in the tournament, was able to field Alberto Gilardino despite his picking up a knock against Spain, the Bologna man starting in a two-pronged attack alongside exciting Milan star El Shaarawy.
Uruguay, who led their series with the Azzurri 3-2 with three draws coming into Sunday's game, are struggling to find their form in Latin American qualifying for next year's World Cup, though they had managed to recapture some at this event.
In the final half hour, Muslera denied Aquilani before the Italians suffered a blow in the 110th minute with a second yellow card for Riccardo Montolivo.
Uruguay forced the pace in the closing minutes, Cavani twice and Suarez firing off target and Buffon saved bravely from Inter Milan midfielder Gargano as the clock ran down on the extra half hour to force the spot-kick denouement.