Bernard Parker's spectacular own goal gifted the home side - who were trailing 0-1 at one stage - a win at the National Stadium in Addis Ababa and continued South Africa's poor record in World Cup qualifying.
The result means Ethiopia have five point at the top of Group A with one qualifying match remaining.
Progress to the final round of World Cup qualifier playoffs is in doubt however after FIFA opened disciplinary proceedings.
Ethiopia stand accused of fielding an ineligible player in the 2-1 win over Botswana on 8 June.
Ethiopian Football Federation president Sehilu Gebremariam told the BBC he was still confident his side can progress.
"This is shocking news - but the point is that we are still leading the group, we believe that we shall still qualify for the next stage," he told the BBC's Newsday programme.
South Africa qualified for the 2002 World Cup but missed out in 2006 before qualifying automatically for the 2010 finals as hosts.
South Africa would only be two points behind if the Ethiopians have to forfeit their victory against Botswana - and receive a technical defeat instead.
Image: © Getty
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