ARMAGH just about hung on to book a place in the semi-finals after seeing a seven-point lead disintegrate at the Athletic Grounds.
Derry mounted a great fightback in the second half and just could not find the equaliser.
The defeat was particularly hard luck on Oak Leaf forward Cormac O'Doherty, who scored 1-9.
Armagh captain Mattie Lennon, who scored 0-6, steadied the home side's nerves with a point deep into injury-time to set up a semi-final against Down.
Derry were disjointed and couldn't complain with the 1-9 to 1-2 deficit they faced late in the first-half.
However, they edged ever closer in the second half, with O'Doherty on target, but Armagh just about got over the line.
SCORERS -- Armagh: M Lennon 0-6 (4f, 1 '65'), B Coulter 1-0, R Fullerton, S Colton, C Gorman 0-2 each, P Duffy, R Donnelly 0-1 each. Derry: C O'Doherty 1-9 (4f, 1 ' 65'), J Shaw, M McGuigan, J O'Dwyer 0-1 each.
ARMAGH -- R Lundy; C Hughes, C McNaughton, R Magee; T Donnelly, P Lappin, D Mone; S Renaghan, R Fullerton; R Donnelly, S Colton, P Duffy; C Gorman, M Lennon, B Coulter. Subs: M McCullough for Coulter (43), C Duffy for Donnelly (57).
DERRY -- M Mulgrew; B Og Corbett, P Burns, E Crossan; N McCallion, J Shaw, J McCullagh; N Farren, D Conway; M McGuigan, E Shaw, B Douban; D Foley, C O'Doherty, T McCloskey. Subs: J O'Dwyer for E Shaw (18), P Gunning for McCloskey (30), T Douban for Foley (47), M McGrath for Corbett (58).
REF -- J Clarke (Cavan).