The Three Lions edged into a 1-0 lead at the start of the second half, as Anthony Gordon swept home from close range, to put Thomas Tuchel's team on the brink of a first world final since 1966.
However, after a succession of defensive focused substitutions by Tuchel, the momentum shifted and Lionel Messi inspired a fightback from the defending champions in the dying minutes of the game.
The German coach has come in for major criticism after England's exit - but he's expected to remain in place - with a contract up until the end of UEFA Euro 2028.
Fans are divided over Tuchel staying on, but former England international Peter Reid - who played in the infamous 'Hand of God' defeat to Argentina in 1986 - believes he must stay in the job.
"I'm disappointed by the result, but the better team won. Argentina are technically good footballers, but physically they’re hard, and they get at you… that’s where you’ve got to keep your discipline.
"We’ve got to a semi-final, you’ve got to stick with Tuchel, you can’t keep changing managers."
England will now take on France in the World Cup third-place playoff on July 18 before Tuchel's squad head away on their summer breaks.