Thomas Mueller's grasscutter off of a rebound and save by American netminder Tim Howard in the 55th minute told the tale of the close defeat.
Clint Dempsey almost had the late-game equalizer in the closing minutes, but his header soared over the top of goal.
Another big chance was kicked away after a 60-yard run by a German defender just at the apron of the box.
Portugal bested Ghana, 2-1 at the bottom of the group which allowed the United States to squeak by on a tie-break for goal differential.
The next game will be on Tuesday, July 1, against either Belgium or Algeria. Belgium had its way with Team USA (www.ussoccer.com) in a so-called friendly game last year in the lead-up to this competition.
USA head coach Jurgen Klinsmann, a former star on the German national squad, was happy to advance.
"It's huge. It's huge," Klinsmann said afterward. "Obviously, we wanted to get the tie. I thought maybe we gave them (Germany) too much respect early on. We didn't give ourselves enough chances. We will have to do better next time."
Fortunately, there will be a next time for these warriors who were not given much of a chance to get this far this time out.
Many pundits thought they would fold out of the box in the opening game against Ghana.
Having successfully gotten that monkey off their back, they got tied by Portugal in the last few minutes, forcing reliance on their advantage in goals scored.
At a town hall meeting in Minneapolis, President Obama began his remarks by "congratulating the US soccer team, Team USA on advancing to the next round of the World Cup."
This is relatively uncharted territory for Team USA.
But it would appear that this team has cobbled together its own unique identity as gritty and more than willing to defy the odds.