The two sides were locked at 1-1 after 120 minutes before Brazil prevailed 5-4 on penalties to secure a place in the quarter-finals.
Lima immediately gave Brazil the advantage in the shootout when she saved Emeri Adames’ attempt, setting the tone for the decisive spot-kicks that followed.
The defeat extends a difficult period for United States youth national teams, with the country's men's and women's programmes continuing to struggle to make deep runs in major youth tournaments.
It was the third occasion since October that a US youth team had failed to win a knockout match at a World Cup. Both the U-17 boys and U-17 girls were eliminated in the last 16 of their respective tournaments on penalties, while the U-20 men's team exited in the quarter-finals of their World Cup in October 2025.
The latest setback is particularly notable given the strength of the United States' senior women's programme. The Americans are the reigning Olympic champions, having won gold at the 2024 Paris Games, and have also claimed two of the past three senior Women's World Cup titles.
However, success at the U-20 level has proved more elusive. The United States last won the tournament in 2012, when their squad included future senior stars Crystal Dunn, Julie Johnston Ertz and Sam Mewis, all of whom have since retired.
The Americans endured a difficult group-stage campaign in Poland. They opened the tournament with a defeat to Italy before drawing 2-2 with Japan. A commanding 9-0 victory over New Zealand ultimately secured their passage to the knockout stage as one of the best third-placed teams.
Brazil, by contrast, entered the last-16 clash after an impressive group campaign. They finished top of their group after defeating Tanzania, Canada and England by a combined 9-2 scoreline.
The knockout match itself was closely contested, with neither side able to establish sustained control.
Brazil eventually broke the deadlock in the 59th minute when defender Sofia converted from a corner kick. The United States responded quickly, with Seattle Reign midfielder Ainsley McCammon restoring parity in the 63rd minute with a goal from open play.
Neither team could produce a winning goal during the remainder of regulation time or extra-time, sending the contest into a penalty shootout.
Lima then delivered the crucial intervention by denying Adames, before Brazil converted enough of its remaining opportunities to complete a 5-4 victory.
The result sends Brazil into the quarter-finals for the third consecutive edition of the U-20 Women's World Cup. It is also their seventh quarter-final appearance in 12 tournament participations.
Brazil's best finishes remain their third-place results in 2006 and 2022.
Hayes raises concerns over tournament schedule
The United States' early exit has also intensified discussion about the timing of the U-20 Women's World Cup and its potential impact on player development.
The biennial tournament is traditionally held in August or September, but the current edition falls toward the latter part of that period and is not being staged during a FIFA international window.
That scheduling has created difficulties for clubs deciding whether to release eligible players, particularly those whose domestic seasons are either beginning or already underway.
On Tuesday, a group of current and former players, including Alex Morgan, Marta, Crystal Dunn and Sophia Wilson, signed an open letter calling on FIFA to reconsider the scheduling of future U-20 Women's World Cups.
US women's national team head coach Emma Hayes has also expressed concern about the amount of high-level tournament experience available to American youth players.
“When I speak about this subject, I am sending a warning sign that I am worried,” Hayes told ESPN. “I am massively worried about the direction for and the lack of all of those experiences for American players.”
The September schedule can create different challenges depending on the domestic league in which a player competes. In fall-to-spring competitions such as the Women's Super League, young players can be taken away from their clubs shortly after pre-season and during the opening stages of the campaign.
In spring-to-fall leagues such as the National Women's Soccer League, meanwhile, clubs must decide whether to release players during a critical stage of their regular-season campaigns.
Several age-eligible American players were also absent from the tournament squad, including OL Lyonnes midfielder Lily Yohannes, Bay FC midfielder Claire Hutton, defender Jordyn Bugg and creative midfielder Melanie Barcenas.
The tournament continues without the United States, with defending champions North Korea among the teams competing for the title. The final is scheduled for September 27.