A hat-trick by Carlos Saucedo and a Gualberto Mojica goal gave the hosts a 4-0 lead, with the Uruguayans sole response a goal nine minutes from time from striker Luis Suarez.
Venezuela moved above them into the fourth and final automatic qualifying spot for the finals with a 1-1 home draw with Ecuador.
Uruguay coach Oscar Tabarez refused to offer as an excuse the fact his side were missing three of their first choice defenders, captain Diego Lugano, Diego Godin and Martin Caceres who were all suspended.
Instead the coach, who guided Uruguay to the 2010 FIFA World Cup semi-finals and then to the Copa America title last year, said that they had to arrest this slump before they play their next qualifier against Paraguay next March.
"Bolivia were very good and deserved to win," said Tabarez.
"We have to get out of this situation and we need to work hard on the solution, because obviously things are not good for us at the moment, it is not something we are used to for we have enjoyed some great moments together."
However, the 65-year-old said they had to pull themselves together if they are to qualify for the finals in Brazil in two years time.
"What we need to do now is to work on ensuring we make the finals by being in the top five (the fifth placed team go into a play-off) when qualifying is over," he said.
His Bolivian counterpart Xabier Azkargorta said he could dream again of reaching the finals, as victory took them onto eight points with seven matches remaining.
"This victory opens up the possibility of qualifying," he said.
"There are 21 points still available to us. We will fight as hard as we can for those points, we will battle all the way and we will endeavour to get better and better than we have been to succeed."