The substitute's perfectly executed close-range volley after Cesar Benitez had headed the ball across the six-yard box completely stunned the Egyptians, who thought that they had done enough to earn a share of the spoils.
Buoyed by a passionate crowd, Miroslav Soukup's side started positively and served notice of their attacking intentions three times in the opening ten minutes. Mohamed Talaat fired wide under pressure from Francisco Silva, Hussam Arafat headed over when well placed from Afroto's free-kick and Ahmed Madgy also fired wide.
There were nervous moments in the Paraguay defence when Joel Silva spilled Islam Ramadan's powerful shot, but he gathered the ball bravely at the feet of Talaat before the striker had a chance to ram the ball home. Silva also failed to claim a swerving shot from Shehab Ahmed at the first attempt but fortunately for the South Americans, Hussam Arafat's subsequent effort was well off target.
As the half wore on, Paraguay moved into the ascendancy and hit the post in the 25th minute when Gustavo Cristaldo's curling free kick found its way through the wall. Two minutes later, they took the lead when the hosts were caught on the break by a fine solo run from Robin Ramirez, who fed Santander to score his side's first goal of the tournament.
The game changed direction nine minutes before the break when ex-Liverpool reserve Ronald Huth was shown a straight red card for hauling down Talaat, who was clean through. From the resulting free-kick, Afroto curled the ball into the net to add insult to Paraguay's injury.
Adrian Coria's side were forced to make a change at the interval with Silva, the team's captain and goalkeeper, replaced by Gerardo Ortiz after the former had suffered a head injury just before half-time. Yet despite the energy and effort of both sides and Paraguay's numerical disadvantage, the second half lacked any real goalmouth action until the very end. Santander tried a cheeky chip and Afroto clipped the outside of the post, but that was it - until Paniagua had the last word.
Now the hosts meet Italy in a repeat of their meeting at this year's FIFA Confederations Cup, while Paraguay face Trinidad and Tobago, who are without a point from their opening two matches. Egypt now must hope for a result against the Italians, or else face the possibility of exiting the competition at the opening stage.