One of the pre-tournament favourites, Belgium join France, Holland and Germany as sides who have exited surprisingly early.
City maestro De Bruyne was orchestrating everything good Belgium did in the opening half-hour.
He forced a superb save from Gianluigi Donnarumma on 22 minutes as he drove forward before cutting inside a challenge and arrowed a left foot howitzer towards the top left corner – only for the AC Milan keeper to tip around the post.
In a fast-paced and entertaining quarter-final, Italy, managed by former City boss Roberto Mancini, went ahead when Nicolò Barella hit an angled shot past Thibaut Courtois on 31 minutes.
And when Lorenzo Insigne curled a beauty past Courtois to double the Azzurri’s lead a minute before the break, it looked as though Belgium’s Euro 2020 might be coming to an early conclusion.
But a Romelu Lukaku penalty in first-half added time threw the Red Devils a lifeline.
Italy continued to create chances after the break, with Belgium struggling to deal with their opponents’ high octane passing game and press.
Just past the hour, however, De Bruyne broke free in the box and sent a low ball across the six-yard box but Lukaku was somehow denied at the far post by the impressive Leonardo Spinazzola on the line.
It was the Belgians’ last clear-cut opportunity of the game and it is Italy who progress to the semi-finals where they will face Spain at Wembley next week.
It also means that De Bruyne, whose exhausting season began on 21 September away to Wolves, can finally take a much-needed break.