Walter Torres gave the home side a lead four minutes into the match. Paraguay, however, responded with three consecutive goals. One of those strikes came from Dario Herrera, who finished the encounter with a hat-trick.
Agustin Ruiz made it 3-3 with five minutes left in the second period, but the South Americans went on to net the next three goals - including two more from Herrera -- and put the game out of reach.
Torres ended with three goals on the day for El Salvador, which faces Spain in its last outing of the competition on Saturday.
The Spanish raced past Costa Rica, 7-1, in Friday's opening game. Antonio Mayor scored four goals in a winning effort, while Gerald Mena accounted for the Ticos' ony tally.
The Central Americans, looking for their first points, will meet Paraguay in Saturday's curtain raiser.