Despites struggling to break down the opposition in the first leg before a late Mustafa Kizza penalty separated the two sides at Lugogo, many thought Uganda still had enough to reach the second round.
Coaches Wasswa Bossa and Charles Ayiekoh named unchanged lineup from the first leg team.
It included seven players from the team that defeated South Sudan 3-0 in Juba and 8-1 on aggregate in the Under-20 Africa qualifiers in April.
Saidi Keni, Mujuzi Musitafa, Geofrey Wasswa, Bashir Asiku, Julius Poloto, Allan Okello and Steven Mukwala all started for the Kobs team regarded as the future of the national senior team.
But South Sudan had different ideas scoring first through Michael Taku Peter for a seventh minute lead before Makueth Wol who plies his trade with Uganda Premier League side Mbarara scored late to hand his country an unlikely victory.
The result proved remarkable for South Sudan who only gained independence from the Republic of Sudan in 2011 and whose senior team cannot make it to Afcon 2019 after failing to record a point after five games.
They now progresses to the penultimate round of the qualifiers where Tunisia awaits.