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With the semi-final showdown with either Argentina or the Netherlands looming, Tite's men let their guards down and allowed Croatia to score an equaliser from a counter-attack with three minutes left in extra-time.
The Atlas Lions have the best defensive record among all quarterfinalists, conceding just one goal from four matches.
Livakovic saved three out of Japan's four penalties in the shootout after the teams were tied 1-1 at the end of extra time.
The flying wing-back is one of the key players in the north African outfit whose last-16 match in the Qatar World Cup against Spain gives them a chance to reach the World Cup quarterfinals for the first time.
The Spaniard Martinez managed Belgium for six years.
With 11 of their players in the squad over the age of 30, and a new World Cup cycle on the horizon, change is inevitable.
Croatia advance to the knockout stages finishing second in Group F.
The Atlas Lions clinched a spot in the last 16 of the World Cup for the first time since 1986.
Delivering Brazil's first World Cup since 2002 will go a long way in helping Neymar cement his place among the game's modern greats.
Police detained about a dozen people after they deployed water cannons and fire tear gas to disperse crowds in Brussels on Sunday and eight more in the Northern city of Antwerp.