Dutch maestros Robin van Persie and Arjen Robben inspired Holland to a stunning, unthinkable 5-1 win over defending champions Spain in a thrilling encounter that will go down in World Cup history.
The Dutch avenged their defeat by the same opponents in the 2010 final in outrageous style, with four unanswered goals in an irresistible second half display in Salvador.
Van Persie and Robben scored two apiece, with each man's first a minor classic in its own right. Defender Stefan de Vrij scored his side's third.
Vincent Del Bosque's side, who also lost their opener against Switzerland four years ago, had actually taken the lead through Xabi Alonso's disputed penalty, a lead they held until Van Persie's instinctive flying header levelled matters just before the break.
After that, Holland were rampant, laying a big marker down for the remainder of the tournament and raising the prospect of a Brazil-Spain second-round clash.
Holland should have taken the lead after just eight minutes, but Wesley Sneijder botched a wonderful opening.
Robben produced the pass that sent Sneijder bearing in on goal but he snatched at his lofted shot and allowed Iker Casillas to thrust his right glove up and make the save.
Spain rallied quickly from that scare and soon began to stamp themselves on the game.
By 20 minutes the Dutch were being dictated to by Xavi, Iniesta, David Silva and Xabi Alonso, with Ron Vlaar producing at least two desperate blocks.
The controversial penalty followed in the 26th minute, starting with Xavi's beautifully weighted pass for Costa.
He surged into the area and took two touches before turning De Vrij, who appeared in real time to trip him.
By the time Xabi Alonso had buried the spot-kick, replays showed Costa apparently initiating contact.
Holland responded positively but needed Jasper Cillessen to paw clear Silva's instinctive lob after a glorious pass from Iniesta in the 43rd minute.
That paved the way for Van Persie's leveller, the Manchester United man reading the space perfectly as he leapt to head Daley Blind's hanging cross high over the helpless Casillas.
The reation was rampant, not least from the high-fiving Louis van Gaal on the touchline.
The celebrations were even better eight minutes into the second half, when a piece of Robben magic gave them the lead.
Van Persie's chip picked out his team-mate, but he had plenty still to do as he controlled the ball brilliantly with the outside of his boot before turning Gerard Pique and Sergio Ramos, converting with a slight deflection off the latter.
Things might have unravelled completely for the holders had the referee spotted Costa's apparent headbutt on Bruno Martins Indi, but the incident went unseen.
There was no holding Holland back, though, Van Persie cracking a volley against the crossbar on the hour before De Vrij made it 3-1 from Sneijder's curling free-kick.
Casillas came to claim but failed, with De Vrij on hand to bundle home at the far post.
The pace only increased from there, Silva's close-range finish chalked off for offside before Holland extended their lead to three in the 72nd minute.
Casillas was wholly culpable this time, turning a harmless back pass into one dreadful touch and an open goal for the alert Van Persie.
Robben completed Spain's misery with 10 minutes left, collecting Sneijder's pass and then reducing Casillas and his defenders to a floundering mess as he made room for an emphatic finish.
Holland might have scored two more had they been more clinical, and Spain's Fernando Torres made a woeful blunder from close range, but their statement was already well made.