Ugandan cult hero Emmanuel Okwi scored the lone goal in the 52 minute to give the East African nation a realistic chance of making their maiden appearance at the World Cup in Russia.
Uganda dominated the game, especially in the first half where legendary Egyptian goalkeeper Essam ElHadary was twice forced to come out and make saves double saves.
Egypt scored a goal through Soliman Mohamoud in the 35th minute but his effort was disallowed to leave the game tied 0-0 going into the half-break.
Okwi, however, injected the venom into Egyptian nerves just six minutes after resumption with the lone goal of the match that left Ghana and Congo, the other Group E members, scratching their heads.
Ghana and Congo will square it out on Friday in the other Group E match.
Uganda Cranes XI: Denis Onyango (GK), Nico Wakiro Wadada, Godfrey Walusimbi, Isaac Isinde, Murushid Juuko, Wasswa Hassan Mawanda,Khalid Aucho, Emmanuel Arnold Okwi, Faruku Miya, Derrick Nsibambi and Joseph Benson Ochaya.
Egypt XI: El-Hadary; Abdel-Shafy, Hegazi, Rabia, Fathi; Hamed, Elneny, Abdallah El-Said, Trezeguet, Salah and Kahraba.