"I'm very disappointed, but I thank our team who let us hope and dream," 27-year-old Ryosuke Takashita said at a Tokyo sports bar, where more than 500 fans cheered their national team throughout the scoreless 120 minutes.
The second-round match at Ellis Park ended goalless after extra time and the South Americans netted a perfect five penalties while Japan's Yuichi Komano hit the bar with his team's third shot.
"At the beginning of the World Cup, nobody, even us, expected much from them, but they advanced to the second round to delight us," 24-year-old supporter Fumiya Inaba told Reuters.
"I want to say thank you to them."
Japan, who carried the hopes of Asia as the region's sole remaining team, reached the tournament's knockout round for only the second time and the first on foreign soil.
Although their running into space repeatedly stretched the Paraguay defence, they were unable to reprise the flowing attacks that had torn Denmark apart in their group decider.
"The Japanese players were not as agile as they were in previous games. But the way they courageously battled with Paraguay until the bitter end deserves the nickname Blue Samurai," the Yomiuri newspaper wrote.
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