Victory was brave in defeat - twice fighting back from a goal down to equalise - but eventually fell to a goal six minutes from time by Jo Jae-Cheol.
Melbourne had already failed to qualify for the second stage after a win, a draw and three defeats in its first five matches.
But a good second-half effort against the Group E winners nearly sealed a shock point for Victory as it twice lifted from a goal down in rainy Seongnam.
Melbourne looked destined for another comfortable ACL defeat as it struggled badly in the first half - deservedly falling behind on 28 minutes.
Striker Nanking Do made a neat turn on the right, threaded the ball between two defenders and midfielder Jeon Kwang-Jin slotted home.
But Melbourne coach Ernie Merrick made two substitutions at the start of the second half, and one - Mate Dugandzic - struck with his first touch of the match within a minute of the restart to equalise.
Dugandzic added plenty of life to Victory's attack and should have had a second on 52 minutes when put one-on-one with the goalkeeper, but fluffed his shot.
The home side went ahead again in the 74th minute with a superb goal to Do after a neat backheel from Fabricio Souza.
But Victory would not go away and Tom Pondeljak struck home another equaliser four minutes later.
Victory keeper Mitch Langerak made an outstanding save in the 82nd minute from a Cho Byung-Kuk header less than a metre from him, before Jae-Cheol struck the winner two minutes later.
Melbourne could even have equalised for a third time, but substitute Luke Pilkington butchered a close-range header with two minutes remaining.
Victory finished bottom of its group after the defeat.
It leaves its A-League rivals Adelaide United as Australia's remaining hope in the ACL after it topped its group to qualify for the second stage.