Goals from Sava Gardasevic and Boris Kopitovic ensured Montenegro progressed at the expense of Northern Ireland from the first qualification round for the 2012 Under 19 European Championships.
The Group Seven hosts only needed a point to secure their passage into the final round of qualifiers for next summer’s tournament in Estonia but fell to a disappointing defeat at Mourneview Park, Lurgan.
Despite missing influential duo David Morgan and James Knowles, Northern Ireland enjoyed long spells of possession in the early exchanges but went behind after 30 minutes.
Luka Djordjevic supplied the through ball and Buducnost Podgorica striker Gardasevic comfortably slotted past Conor Brennan.
And the visitors remained ahead until just after the hour mark when Ipswich’s Josh Carson smashed home a free-kick from the edge of the area to bring the sides level.
But Montenegro restored their lead just five minutes later.
Slack defending gave centre half Kopitovic time and space to rise highest in the Northern Ireland penalty box to head home Milos Kalezic's corner.
Carl Winchester went close to equalising for Steve Beaglehole’s lads in the closing stages but Montenegro held on to secure a crucial victory.
They will now join group winners Germany in the Elite stage of qualification.
In their final game, the Germans recovered from 3-0 down to draw 3-3 with Belarus.
NORTHERN IRELAND: Brennan, McLaughlin, Robinson, McKeown, Burke (Wilson 77), McCarten, Carson, McCaffrey, Winchester, Toland, McAlinden (Ball 46).
Montenegro: Petkovic, Milosevic, Mustur, Cukovic, Djordjevic (Medenica 90+1), Kalezic, Bakic, Vukcevic, Kopitovic, Gardasevic (Zarubica 73), Raickovic.