Coach Ong Kim Swee blamed individual errors and a lack of concentration for the national Olympic team's 2-1 defeat to Bahrain in a Group C second round Asian Zone qualifying match in Manama on Sunday.
The defeat meant the team have no chance of qualifying for the London Olympics despite two matches still to play.
Mohamed Tayed Al Alawi gave the home side a 25th minute lead only for Ahmad Hazwan Bakri, a 76th minute replacement for Negri Sembilan striker Ahmad Shakir Ali, to equalise with five minutes left to play.
But Bahrain were not to be denied their second group win with midfielder Hussain Farhan sealing it three minutes later.
The goal was the result of a defensive error by centre-back Muslim Ahmad, leaving Hussain with ample space to place the ball over goalkeeper Khairul Fahmi Che Mat.
Malaysia's disappointing night was compounded with the sending off of Wan Zack Haikal Wan Noor five minutes into second half stoppage-time.
"It was many little things. We managed to level proceedings but failed to hang on to it. We should have earned a point here," said Kim Swee when contacted in Manama.
"We allowed them to dominate but came back stronger in the second half but we lost our focus in the closing minutes."
Malaysia's remaining matches are against Japan (Feb 22) and Syria (March 14).
Kim Swee will shift his focus to the S-League, where the Young Tigers face Gombak United on Thursday.