Croatia took the lead through Ivan Perišić in the 53rd minute, before Cristiano Ronaldo levelled from the penalty spot in the 68th minute. Gonçalo Ramos then secured Portugal's victory in the fourth minute of stoppage time.
Portugal will face Spain in the next round on Monday in Dallas after Spain cruised to a 3–0 victory over Austria.
The match between Croatia and Portugal was one of the standout ties of the FIFA World Cup Round of 32 in the United States, Mexico and Canada.
Toronto hosted its sixth and final World Cup match, with BMO Field – arguably the tournament's most football-focused venue – providing a fitting farewell as two European heavyweights, Croatia and Portugal, served up a thrilling spectacle.
The match was played in a superb atmosphere at a sold-out BMO Field in front of a crowd of 43,036.
It had everything: three goals, four more disallowed – three of them for Croatia – a controversial penalty, and a dramatic finale featuring no fewer than 19 minutes of added time.
The battle on the pitch was matched by an equally passionate contest in the stands. Both the Croatian and Portuguese communities are large and well-established in Toronto and the surrounding area, something that was evident even during the pre-match build-up.
Although the Croatian supporters were outnumbered on this occasion, they certainly made themselves heard. Their celebrations erupted when Croatia took the lead.
In the end, however, it was the Portuguese fans who celebrated, while Croatia's stunned supporters gave Luka Modrić a standing ovation after what may well have been his final appearance at a FIFA World Cup, before warmly applauding the rest of the team.