The US had won the past two World Cups and not lost in 58 global games, a run stretching back to 2006.
Team USA's hopes of winning a third consecutive FIBA gold medal - and sixth consecutive global gold medal - are now over.
For the first time in 13 years, there will be a new men's FIBA World Cup champion.
The Americans lost 89-79 to France in the quarterfinals, ending their World Cup run in China prematurely.
The U.S. led by seven points in the fourth quarter after being down by as much as 10 early in the second half.
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Evan Fournier and Rudy Gobert were two of the best National Basketball Association players on the court Wednesday night, and because of it the Americans' defense of their consecutive World Cup championships is over.
France had been 0-9 against the U.S.in major global play before Wednesday's win.
Donovan Mitchell had scored 29 points for the U.S.
The U.S. were clear favourites coming into Wednesday's match, and history supported that: they had won five straight gold medals at the World Cup and the Olympics.
France now advance through to a very winnable semi-final against Argentina, who were themselves impressive in toppling Serbia yesterday evening.