Despite a spirited display, Phil Neville's Lionesses went down 2-1 to the reigning world champions USA in Lyon.
Skipper Steph Houghton had to chance to send England into extra-time but fluffed a penalty - awarded after VAR - with less than 10 minutes to go, hitting a tame shot too close to USA keeper Alyssa Naeher.
And it was VAR that had robbed England of a deserved second-half equaliser earlier in the second half when Ellen White was called offside by a toenail.
White, who had earlier drawn England level in the first half, thought she had stroked home a second equaliser in the 67th minute but the dreaded Video Assistant Referee intervened to deny her by the most slender of margins.
Christen Press had given USA an early lead with a powerful header from a cross from Kelley O'Hara in the ninth minute of the game.
But England will have been disappointed with the amount of space they gave the USA forward in the heart of the area.
However, within 10 minutes, England were level.
The FA's head of women's football, Baroness Sue Campbell, said she was "proud" of England's performance, along with their behaviour on and off the pitch during their World Cup campaign
Beth Mead crossed for White to guide home the leveller past Alyssa Naeher.
The Lionesses then enjoyed a spell of strong possession, almost forcing USA defender Becky Sauerbrunn to slice a cross into her own net.
They say you've got to score when you're on top and England paid the price on 31 minutes when another USA cross, this time from the left, found Alex Morgan ghosting across her market to head home powerfully.
ITV News Correspondent Dan Rivers reports on the agony of being an England fan
England's miserable night was complete when Millie Bright received a second yellow card a couple of minutes from the end and was sent off.
Speaking after the match Houghton said she was "heartbroken" at the result.
Speaking to BBC Radio 5 Live, she said: "I'm heartbroken but I'm very proud of the team because we fought so hard in this tournament. It was so close against the best team in the world but we are so disappointed.
The official England women's football Twitter page thanked fans for their support and promised "this thing that is happening, doesn’t end here".
ITV News Sports Editor Steve Scott echoed those words, claiming success in this year's competition should be followed by a "lasting legacy created by this moment".
He added: "I wouldn't be surprised if 10 million people tuned in to watch them tonight, that would have been unthinkable just a few years ago.
"They've really taken women's football and women's sport to a whole new level."
Thousands of England fans were glued to their TV screens - with an estimated audience approaching 10 million at home joining the sellout 56,000 fans in the ground.
Despite defeat, England fans who travelled to Lyon to watch the match were extremely proud of the Lionesses - but not Video Assisted Refereeing.
One fan told ITV News: "(I'm) devastated actually to miss that penalty late on, yeah, we're not fans of VAR."
"It was a really good game, Lionesses played really well, just unlucky with the result I think, we had lots of chances, just couldn't put in the back of the net," said another.
Fans back in the UK packed into parks to watch the game on big screen and crammed into pubs, all hoping that football would finally come home.
Fans in London's Battersea Park were unable to contain their emotion as the turbulent game roared from end to end, with the typical nail biting images hard to miss.
After the match, fans at the park told ITV News of their disappointment.
One said: "We played really well to potentially beat the US, but I'm absolutely gutted."
Unfortunately - perhaps inevitably, given it's England - it was all to end in tears.