China, second bottom in Group A, move on to five points from six games, five points adrift of second-placed South Korea.
The top two in each of Asia's two qualifying groups advance automatically to the finals, while the teams in third place enter into a series of playoffs.
"We have kept our World Cup qualifying hopes alive," China coach Marcello Lippi told reporters.#
"If we had drawn or lost, we would have had no chance.
"Now we have reduced the gap to the second ranked team from seven points to five points, but we need to win more matches to be able to play in the World Cup."
China's previous win against South Korea came in Tokyo at the 2010 East Asian Cup in a low-key game but this victory - in front of a capacity crowd at Helong Stadium - was of much greater significance.
The pressure was on Lippi's team to perform with the profile of the sport at an all-time high following an expensive buying spree by Chinese clubs.
China, who have only previously appeared at the World Cup on one occasion in 2002, had the better of the opening exchanges despite the Koreans dominating possession, with Guangzhou Evergrande full back Zhang Linpeng regularly pushing forward to cause the visiting defence problems.
Zhang's strike in the 34th minute was deflected wide and from the resulting corner China scored as Yu steered Wang Yongpo's set-piece into the bottom corner with a deft header.
South Korea, who have qualified for every World Cup since 1986, pushed for the equaliser in the second half and Chinese goalkeeper Zeng Cheng did well to deny long-range efforts from Swansea City midfielder Ki Sung-yeung.
He also saved a header from Ji Dong-won as the home side held on to take all three points.
(Reporting by Michael Church in Sydney,; Editing by Ed Osmond)
