Luis Enrique's men were heavy favorites to beat Japan on 1 December after thrashing Costa Rica 7-0 in their opener and drawing 1-1 with Germany.
La Roja started brightly and grabbed the opener in the 11th minute when Alvaro Morata slotted home from close range.
However, the Samurai Blues staged an incredible comeback and secured a memorable 2-1 win through goals from Ritsu Doan (48') and Ao Tanaka (51').
The winner was scored in a contentious fashion as the ball appeared to have gone out of play.
Spain are through to the last 16, nevertheless, and will face Morocco after finishing second in Group E.
Despite this, Japan shocked the Spaniards, and many pointed the finger at goalkeeper Simon.
Doan's strike was perhaps one that the Athletic Bilbao shot-stopper should have done better with, but the power was too much for him to handle.
Simon made one save throughout the loss to Japan and his passing was sometimes questionable.
Fans are reminding Spain boss Enrique that he left Manchester United goalkeeper De Gea at home.
The veteran Spaniard is in fine form for the Red Devils, making 20 appearances across competitions and keeping nine clean sheets.
Enrique explained De Gea's omission from Spain's preliminary 55-man squad ahead of the FIFA World Cup, saying (via SportBible):
“I need a goalkeeper that transmits peace and calmness to me - and that doesn’t mean they won’t make mistakes, errors are part of football. But what they generate I like a lot.”
The former Barcelona manager's words may come back to haunt him as fans are taunting his decision to leave De Gea out.
Here are some reactions from supporters on Twitter:
Spain's last 16 opponents Morocco's manager talks up his side's chances of winning the FIFA World Cup
Spain will play Morocco in the last 16 of the FIFA World Cup after finishing second in Group E.
Les Lions' manager Walid Regragui has discussed the African nation's unlikely goal of winning the FIFA World Cup.
He spoke after beating Canada 2-1 to secure the top spot in Group F (via BBC Sport):
"We set ourselves an objective to give everything we have and get out of the group stages. After that, why not? Aim for the sky. We need to change our mentality and we will be a difficult team to beat."
"Why not dream about winning that trophy? As African teams we need to set this objective."