Lloyd got her head on a ball sent into the box by Julie Johnston and put it to the corner of the net just past the outstretched arms of Chinese keeper Wang Fei in the 51st minute.
That goal was enough to propel the U.S. into a semifinal showdown with Germany on Tuesday at Olympic Stadium in Montreal.
The Germans got past France earlier in the day in Montreal, winning 2-1 on penalty kicks.
"Overall as a team we wanted to come out fast and strong out of the gate and put them under pressure," said Lloyd, who was rewarded with player of the match honours.
"That was the first game all tournament when we put them back on their heels. Collectively from the top all the way down it was fantastic and phenomenal team performance."
The U.S. nearly took a 2-0 lead when Ali Krieger hit the crossbar and Lloyd followed up, but she put the rebound over an open net from almost the exact location that she scored her goal.
Hope Solo was never really tested in the U.S. goal, although she did come up with a save in the second half. The U.S. defence managed to take away almost every opportunity the Chinese had before they became dangerous.
The Americans had possession of the ball an impressive 56 per cent of the time and had 17 attempts at goal, four of which were shots on goal, compared to just five and one, respectively for China.
"We felt that China liked to build out the back and they liked to take risks," said American coach Jill Ellis.
"As a result we felt their back line would get disconnected from the team and so we saw that as an opportunity to get pressure on them. That was part of the game plan. It's a really good step heading into the semis."
In the first half, the play was dominated by the U.S., who held all the scoring chances and controlled most of the play.
The Chinese did have brief moments when they pressured the Americans, but they were unable to get any chances on goal. They did direct four balls towards the net in the first half, but didn't register a single shot on goal.
The Americans, on the other hand, had 11 tries towards the goal and three shots, one of which was stopped by Chinese defender Li Dongra, who kicked away a shot from Johnston after Fei found herself out of position.
"We lost the game because of the head coach. Because of me," said China coach Hao Wei.
"I didn't do well in tactics. There is a gap between us and the U.S., but not that big of a gap. I gave them the goal to go the semifinals. We didn't reach that goal and it's a pity."
Perhaps the best opportunity for the Americans in the first half came in the second minute when Amy Rodriguez found herself in alone in the Chinese goal, but a charging Fei caused Rodriquez to shoot the ball wide.
Fei did make saves off Alex Morgan in the fourth minute and stopped Lloyd off a free kick in the 37th minute.
"We've talked about trying to grow in this tournament and this was a big, big step toward that," said Ellis.
"I can tell in the players that their chests are high and they're ready to go."