Italy was reduced to 10 men by a red card for midfielder Claudio Marchisio in the second half and Uruguay went on to score the winner in the 81st minute of Tuesday's Group D match.
Prandelli, who criticized the red card decision, announced his resignation at the start of his post-match news conference.
Minutes later, Italian Football Federation president Giancarlo Abete, sitting next to Prandelli, announced he was also resigning.
Abete said the federation would hold a meeting on Italy's return to discuss Prandelli's decision to quit, saying he hoped the coach would withdraw his resignation.
Abete said his own decision to leave was ''irrevocable.''
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- Claudio Marchisio