Host Iran thumped Australia 5-1 in the AFC U-16 Championship quarter-finals to also book a place at the 2013 FIFA U-17 World Cup.
Australia's only goal came in the 88th minute through substitute Bai Antniou, although the Joeys were already 4-0 down at that stage.
Iran took the lead through Saeid Ezatolahi's 30th-minute penalty, before Reza Karmollachaab made it 2-0 before the break.
It was 3-0 just after the hour-mark with Mohammadreza Bazaj on target, and Ali Rigi added a fourth with 10 minutes to go.
Antniou pulled one back for the Joeys with two minutes remaining, but there was still time for Karmollachaab to grab his second and Iran's fifth in stoppage-time.
"Congratulations to Iran for qualifying to the World Cup and on their much deserved victory," Joeys coach Alistair Edwards told the-afc.com afterwards.
"Of course we had hoped we would qualify and we didn't expect such a result but Iran played a high-pressure game and didn't allow us to get into our rhythm. We made too many mistakes at times but again this was mainly down to Iran's pressure.
“At the end of the day Iran played much better than us and deserved their victory.
"I am happy for Iran but also proud of my players. Apart from the match today I think we had a good tournament."
Australia line-up:.Andre JANNESE (gk), 3.Aaron CALVER, 4.Jack IREDALE, 5.James BALDACCHINO (C), 8.Kevin LY, 9.Joshua MACDONALD, 10.Daniel DE SILVA, 11.Alex GERSBACH (22.Todd NORRIS 68’), 13.Rocco PIZZATA, 19.Taylor TOMBIDES (17.Bai ANTONIOU 68’), 20.Hyuga TANNER (6.Liam ROSE 39’).
In the other quarter finals matches, Iraq defeated Kuwait 3-1, Uzbekistan defeated Korea Republic in a penalty shoot-out after the score was level at 1-1 after extra time and Japan defeated Syria 2-1.
John Boultbee is set to relinquish his role as Football Federation Australia’s (FFA) Head of National Teams to take up a role as honorary head of World Rowing (FISA).