Iceland pulled off one of the greatest shocks in European Championship football history when they recovered to beat England 2-1 in their last 16 clash in Nice and will now face hosts France in the quarter-finals.
The England manager Roy Hodgson announced his resignation after the loss.
England got off to a dream start when Raheem Sterling was brought down by goalkeeper Hannes Halldorsson and Wayne Rooney confidently thumped home the penalty in the fourth minute.
Ragnar Sigurdsson equalised within two minutes for Iceland, turning the ball in at the far post after Aron Gunnarson's massive throw-in was headed into his path by Kari Arnason.
Iceland then went ahead in the 18th minute when an intricate exchange of passes on the edge of the area ended with Kolbeinn Sigthorsson scoring with a low shot that goalkeeper Joe Hart got a hand to but could not stop from rolling into the net.
Shell-shocked England never recovered and slumped to one of the most embarrassing defeats in their football history. The loss comes just days after the UK voted to leave the European Union in the controversial Brexit referendum.
Hodgson said, "my contract was always going to be up after this tournament. I would have loved to have stayed on another two years, but now it is time for someone else to take over this group of players."
The much-travelled 68-year-old was in charge for four years after replacing Italian Fabio Capello following a club career mostly served in England and Scandinavia and an international career which also included the Swiss national team.
"We are out of the Euros so now is the time for someone else to oversee the progress of a hungry and extremely talented group of players," he said.
"They have done fantastically, and done everything asked of them. When I arrived I was told that players would not turn up or pull out at the last minute but I haven't seen any of that."
"It's been a fantastic journey, the last four years. I will look back on it with pride," added Hodgson, whose England side won only three of 11 games at major tournaments.
"I'm sorry it's ended in another exit but these things happen and I wish you the very best and I hope you can still see an England team in a final of a major tournament very soon, something that we have been unable to deliver."