The result came as something of a shock, with Tyrone in arguably the better form over the course of the season as well as holding home advantage over their fierce rivals.
However that form counted for nothing as Armagh put the Red Hands to the sword in a see-saw battle that saw both sides hold the lead at various stages.
Tyrone suffered a blow when Mattie Donnelly was sent off for a second yellow card in the first half, but Mickey Harte's side overcame a two point deficit to take the lead with three unanswered scores early in the second period.
However Armagh rallied magnificently, outscoring Tyrone by 6 points to 2 in the closing stages to take victory by 0-13 to 0-10.
Elsewhere on Sunday, Down were eliminated from the Qualifiers after suffering a 10-point defeat to Kildare.
James McCartan's side were under the cosh in the first half but rallied well early in the second with scores from Benny Coulter, Kevin McKernan, Donal O'Hare and Darren O'Hagan putting them level with their Leinster opponents.
That was as good as the comeback got for the Mournemen though, as Kildare turned on the style and Tommy Moolick's late goal put the gloss on a 1-18 to 0-11 victory for the Lilywhites.
In Saturday night's game Cavan limped out of Championship competition after being hammered 0-16 to 0-5 by Roscommon.