It is one of football's more eccentric rituals. Every weekday, Isaias Ambrosio, an engaging 73-year-old Brazilian, travels to the Maracana stadium in Rio de Janeiro where he relives a football match that happened 50 years ago.

He stands overlooking the pitch, sweating in morning sun, retelling the moments when Brazil lost the 1950 World Cup final to Uruguay. "On the 33rd minute, with only 12 minutes remaining," he narrates with the dramatic intensity of a radio commentator, "Gigghia takes the ball from the middle of the pitch." He turns around and points at the grass, where a few men are laying turf. "And he goes and goes and goes and" . . . silence. He pauses and takes a breath. Then, in a sombre tone, slowly, reluctantly, inevitably: "Goal for the Uruguayans."

Tomorrow is the 50th anniversary of the most famous defeat in the history of Brazilian football, the day that the world's most gifted side unexpectedly lost 2-1 at home to a young team from their tiny southern neighbour. An estimated 200,000 spectators - the largest crowd at any football match - stood witness. Of that number, all but 280 were cheering for the "invincible" hosts. It was such a grandiose humiliation that, even now, the wounds have not healed.

Never mind that Brazil became world champions eight years later, in Sweden; and again four years after that, in Chile, in 1970 with the legendary team that included Pele, Gerson, Jairzinho and Rivellino; and again in the United States in 1994. The final of July 16, 1950, still weighs heavily on the Brazilian soul.

A football match has probably never had such a strong and enduring impact on the emotional life of a nation. "For me, the game is still in the present. The story is not over," laments Isaias Ambrosio, whose daily commentaries are part of an expanding universe of idiosyncratic comings to term with defeat. In Brazil, the match has inspired more literature than any other sporting event. Nelson Rodrigues, the country's most celebrated playwright, wrote in 1966 that: "Everywhere has its irremediable national catastrophe, something like a Hiroshima. Our catastrophe, our Hiroshima, was the defeat by Uruguay in 1950."

This sounds a ludicrous exaggeration but he was very serious, and many Brazilians would still agree. Three books have been published to coincide with the 50th anniversary analysing the defeat and its consequences for the Brazilian psyche.

"I was motionless, sitting on a concrete step, watching the sun shine obliquely on the pitch, hearing the silence of the crowd, a silence not even broken by the sobs, in brutal gasps, of the collective orphaning," grieves the novelist Carlos Heitor Cony, a member of the prestigious Brazilian Academy of Letters. "Survivors of that cruel afternoon believed they would never again be happy. What happened on July 16 1950 deserves a collective monument, like the Tomb of the Unknown Soldier. These are the things that build nations, a people drenched in their own pain."

A film was even made about the match. In Barbosa - made by the award-winning Jorge Furtado - the protagonist goes back in time to warn goalkeeper Moacyr Barbosa that Gigghia is going to shoot to the bottom left corner of his goal. In the words of the narrator, the goal had to be annulled because the "defeat stuck like a sign of destiny, proof that in this country nothing ever works out".

Barbosa became the scapegoat, the personification of the national trauma. Even though he was unanimously voted best goalkeeper of the 1950 World Cup by journalists, in the aftermath he became the country's whipping boy in a way that was shameful by any standards. He told a documentary that the saddest moment was 20 years after the match when he was spotted by a woman in a shop. "Look at him," she said to her son, "He is the man that made all of Brazil cry."

One sportswriter wrote that Barbosa was victim of the greatest injustice in footballing history. Even his colleagues shunned him. When, in 1993, he went to visit the Brazilian squad's training camp he wasn't allowed in for fear he would bring them bad luck. Shortly before he died, almost penniless, last April, he said: " Under Brazilian law the maximum sentence is 30 years. But my imprisonment has been for 50."

The goalkeeper is the subject of the recently-published Barbosa, A Goal Is Fifty Years Old, by Roberto Muylaert, one of Brazil's most distinguished journalists. In it he reveals a sublimely bizarre fact that gives the whole tale another surreal twist. In 1963 Barbosa invited friends to a barbecue at his home. Only when the guests arrived did they realise why. The fire was flaming unusually high and was hissing from burning paint. Barbosa wasn't using ordinary wood: he was burning goalposts. The Maracana's "fateful" goalposts were being reduced to ashes by the man whose life had been branded by them. Muylaert describes the bonfire as a "liturgy of purification". Barbosa deliriously compared himself to a cannibal: "That well-seasoned steak with onion and vinegar sauce that I ate could symbolise Gigghia's leg pumping with the camphor of the game."

But why was the 1950 World Cup Final much more than a game of football? First, it was the only time Brazil has ever hosted a soccer world cup. The Maracana, built for the tournament, was the world's largest stadium - a world-champion stadium built for a world-champion team. It was the embodiment in concrete of Brazil's footballing sovereignty.

Second, it was a study in sporting hubris. Brazil had demolished Sweden 7-1 and Spain 6-1 in the final round. Only a draw was needed against the unfancied Uruguayans. Brazil's victory was considered such a fait accompli that the Rio mayor announced triumphantly on the loudspeaker system shortly before the kickoff: "You, players, who in less than a few hours will be hailed as champions by your compatriots. You, who I already salute as victors."

According to Roberto Muylaert, victory was supposed to signal "the emergence of a renewed and respected nation that would finally show the planet the strength, quality and discipline of a first world country". Instead, it reinforced a perennial feeling of inferiority.

The match set up the contradictory mentality that has underlined Brazilian support in the following half-century. For Brazil, the opposition is irrelevent. Brazil is always playing against itself, against its own demons, against the ghosts of 1950. The anthropologist Roberto DaMatta, in a paper submitted to the Ibero American Studies Centre, describes in serious academic tones that the defeat was "possibly the biggest tragedy in contemporary Brazilian history". He writes: "The defeat brought a united vision of the loss of a historic opportunity. It happened at the beginning of a decade in which Brazil was looking to assert itself as a nation that had a great destiny to fulfil. The result was a tireless search for explications and blame."

In his book, Anatomy of a Defeat, Paulo Perdigao says: "Of all the historical examples of national crises, the World Cup of 1950 is the most beautiful and most glorified.It is a Waterloo of the tropics and its history our Gotterdammerung. The defeat transformed a normal fact into an exceptional narrative: it is a fabulous myth that has been preserved and even grown in the public imagination."

One reason that it has stayed in the collective consciousness is that it was the last event in Brazil to happen before television, which arrived two months later, in September 1950. The 200,000 who saw the game were up 10% of the population of Rio. Almost everyone in Rio has a family member - often a living one - who was there. The whole city feels as if it personally witnessed the catastrophe.

Gigghia's goal was caught on film. The few seconds that show the Uruguayan's run, the shot, Barbosa's dive and then the goalkeeper slowly picking himself up have become Brazil's equivalent of the Zapruder footage of John Kennedy's assassination - endlessly analysed, somehow timeless, and showing a moment that defines a nation's history. The goal and the gunshot that killed Kennedy, both have, believes Muylaert, "The same drama, the same movement, rhythm, the same precision of an inexorable trajectory'."

One of the immediate consequences of the defeat was the scrapping of the white shirts that had until then been the Brazilian strip. In their place were introduced the yellow tops that have become the world's most recognisable - and romantic - footballing fashion brand. Carlos Heitor Cony believes something else was lost. "In 1950 we lost that innocence, that excitement that we inherited from the Indians when they saw the [Portuguese] ships approaching [in 1500]. Maybe it was best that way. Painfully, accidentally, we became adults."

Perhaps the greatest irony is that the game is not remembered with quite such importance by the victorious Uruguayans - who have never won a World Cup since, or even come close. On Monday at the Maracana I asked a Uruguayan tour guide, Juan Jose Olivera, how his compatriots feel about Brazil's obsession with the defeat. "Young Uruguayans don't really care about the past," he said. "They don't talk about the 1950 World Cup. It happened too long ago."