Algeria came into the tournament as the overwhelming favourites on the back of a 35-game unbeaten run across all competitions.
But the holders flattered to deceive in the rescheduled AFCON, being held to a 0-0 draw by Sierra Leone in their opening game before suffering a surprise 1-0 defeat to Equatorial Guinea in their second.
That defeat meant only a win against the Elephants would see the Desert Foxes progress to the knockout rounds in Cameroon.
Algeria did not start well against the 2015 winners as AC Milan midfielder Franck Kessie gave Ivory Coast the lead after 22 minutes.
Ibrahim Sangare headed in a Serge Aurier free kick six minutes before halftime while Arsenal winger Nicolas Pepe added a third nine minutes after the break.
Riyad Mahrez struck the upright with a penalty in the 60th minute as Algeria missed the chance to reduce the deficit; something Sofiane Bendebka did with a header 17 minutes from time.
Algeria finished bottom of the group while Equatorial Guinea finished second behind Ivory Coast with a 1-0 win over Sierra Leone.
