Godin's goal off a corner in the 81st minute was enough for the 2010 semifinalist to progress in the competition after a fiercely fought battle against the Italians in a match witnessing flared tempers, rough tackles and a moment when Giorgio Chiellini accused Luis Suarez of biting him.
The result meant Uruguay finished second in Group D behind Costa Rica, who drew 0-0 with England in Belo Horizonte.
Both teams, knowing the importance of the game, started cautiously. Italy had the better of the possession in the first 45 minutes but they failed to attack the opposition goal consistently.
The half also saw plenty of rough tackles including the one involving Mario Balotelli, who was shown a yellow card for the second time in the group stages after a hard challenge against midfielder Alvaro Perreira. The Italian stiker's form and behaviour on the field led to Marco Parolo replacing him at the break.
Uruguay star forward Suarez, who took the field despite concerns over his fitness, kept himself in the game with couple of shots on the target. The Italians, however, defended well to keep their opponents at bay.
Action heated up further in the second half. The Italians were down to 10-men in the 59th when midfielder Claudio Marchisio was handed a red card for nastily pushing Egidio Arevalo to the ground.
Uruguay expectedly stepped up the pressure on the now vulnerable Italian but failed to find the breakthrough with the clock ticking past the 80th minute.
The South Americans however were not to be denied in the 81st minute when Godin used his shoulder to score the winner.
Suarez could not score this time but was in the spotlight for the wrong reason. Two minutes before Uruguay found the goal, the star forward leaned towards Chiellini in the box. Soon after the incident, Chiellini was seen indicating the referee that it was a bite mark.