Sri Lanka beat Australia by 20 runs at the Oval on Monday to reach the Champions Trophy semi-finals.
The Sri Lankans, who finished second behind England in Group A, will play Group B winners India in the last four in Cardiff on Thursday.
New Zealand were eliminated along with Australia from Group A.
England will face Group B runners-up South Africa in the first semi-final at the Oval on Wednesday.
Australia were struggling at 92 for five after 15 overs in their do-or-die ICC Champions Trophy match against Sri Lanka on Monday.
Sent into bat, Sri Lanka rode on Mahela Jayawardene's unbeaten 81-ball 84 to post 253 for eight, leaving the defending champions with a Herculean task of chasing down the target in 29.1 overs to ensure a semifinal berth from group A alongside England.
Adam Voges and Matthew Wade were batting on 10 and nine respectively, at the 15th over mark.
The Lankans held all the aces, but in the unlikely event of Australia winning the game after 29.1 overs, New Zealand will be through.
Shane Watson started Australia's innings with a delightful boundary through covers but that was all he could do as the all-rounder was bowled by Nuwan Kulasekara.
Phillip Hughes lasted barely 10 balls as he too was shown the door by Kulasekara who bowled a back of length ball that pitched outside off before inducing a thick edge.
Glenn Maxwell blazed away to 32 off just 20 balls before being cleaned up by pace spearhead Lasith Malinga. Maxwell smashed five fours and a six during his breezy knock.
More trouble was in store for Australia as they lost George Bailey thanks to a fine piece of fielding from Kulasekara whose flat throw from short fine leg caught the skipper well short of the crease.
Mitchell Marsh was then bowled by Angelo Mathews to make matters worse for the Aussies.
Australia: George Bailey (capt), Shane Watson, Matthew Wade, Phil Hughes, Adam Voges, Glenn Maxwell, Mitchell Marsh, James Faulkner, Mitchell Johnson, Clint McKay, Xavier Doherty.
Sri Lanka: Angelo Mathews (capt), Kusal Perera, Tillakaratne Dilshan, Kumar Sangakkara, Mahela Jayawardene, Dinesh Chandimal, Lahiru Thirimanne, Nuwan Kulasekara, Rangana Herath, Shaminda Eranga, Lasith Malinga.