The Hampshire batsman stirred up Australia before today's encounter at Newlands by saying he wanted to humiliate them by securing the victory which would send them hurtling out of the tournament.
But those comments only served to provoke Australia into a stunning display and claim a seven-wicket win with 31 balls remaining.
England managed to make it through to the second stage as the victory was not achieved quick enough to put them out on run rate.
Paul Collingwood's side were dismissed for a lowly 135, eclipsing their previous Twenty20 lowest of 144 for nine recorded the last time the two sides met in this format in Sydney in January
Australia's display delighted captain Ricky Ponting, who claimed Pietersen's comments had backfired on his side after being comprehensively outplayed.
"A lot of the guys in this side have been playing cricket a long time and unless you can back up comments they don't mean anything at all," said Ponting.
"They had their chance today to do what he said they wanted to do which was a once in a lifetime opportunity to try to humiliate Australia - and if anything they were the ones who walked off humiliated today."
Australia's superb display to dismiss England for such a lowly total, which was helped by Nathan Bracken's man-of-the-match display to claim three for 16, could even have given them the chance to remove their arch-rivals from the competition.
Had Australia romped to victory inside 9.3 overs, they would have damaged England's run-rate to such an extent Zimbabwe would have progressed.
But Ponting insisted: "I think the way the boys were going at the top of the order it probably looked like we were trying to achieve that, but I think that was probably out of our grasp.
"We were just trying to win the game. We couldn't afford to go too hard and lose the game so I'm really pleased with what I achieved.
"I'm pretty happy with the result. We had our backs to the wall going into the game against a team that has been playing a lot of cricket and a team with a lot more experience than us in this format of the game and we've come away with a very comprehensive win."
Collingwood attempted to play down the role of Pietersen's comments in England's defeat. "Kevin's obviously Kevin and we just wanted to go out there and win the game," he said.
"We didn't get enough runs on the board and if we're going to go on and progress in this competition and do well I think we're going to have to be a little bit braver in our strokeplay."
Collingwood had watched uneasily as England struggled early in their innings, scoring only 35 runs in the first six overs of fielding restrictions and only 64 at the halfway stage.
Andrew Flintoff, who was clearly struggling with his troublesome ankle when he bowled, took England past the 100 mark with a quickfire 31 off 19 balls, but it was never a total which was likely to trouble Australia's batting line-up.
England face South Africa in the first of three matches in the second stage as they attempt to finish in the top two of their group to reach the semi-finals.
"It's still early doors and we're still learning a lot and it's obviously a big game on Sunday," said Collingwood.
"This is exciting and a good chance for the young lads to come into it, start performing and get on a roll.
"Today we would hold our hands up and say we have been out-played by Australia in all three aspects of the game."
D L Maddy c Hussey b Clark 20
M J Prior c Bracken b Johnson 17
L J Wright c Gilchrist b Johnson 3
K P Pietersen b Bracken 21
P D Collingwood lbw b Lee 18
A Flintoff c Clark b Johnson 31
O A Shah c Clarke b Bracken 14
A D Mascarenhas run out 4
C P Schofield c Gilchrist b Clark 1
S C J Broad b Bracken 1
R J Kirtley not out 2
Extras nb3 3
Total (for 10 wkts, 20 overs) 135
Fall: 1-29 2-37 3-48 4-73 5-97 6-127 7-128 8-132 9-132.
Bowling: Lee 4 0 31 1; Bracken 4 0 16 3; Clark 4 0 24 2; Johnson 4 0 22 3; Symonds 2 0 28 0; Clarke 2 0 14 0.
A C Gilchrist c Flintoff b Schofield 45
M L Hayden not out 67
R T Ponting c & b Flintoff 20
A Symonds not out 2
Extras lb2 2
Total (for 2 wkts, 14.5 overs) 136
Fall: 1-78 2-120
Did Not Bat: M E K Hussey, B J Hodge, M J Clarke, M G Johnson, N W Bracken, S R Clark.
Bowling: Broad 3 0 23 ;0 Flintoff 4 0 25 1; Collingwood 1 0 16 0; Kirtley 1 0 17 0; Mascarenhas 2 0 22 0; Schofield 3.5 0 31 1.
Australia beat England by 8 wkts