Comedy defending from Saido Berahino and Liam Moore meant the Three Lions' best performance of the competition ended in heart-breaking fashion by Ricardo Horta
Saido Berahino missed a host of chances before capping his performance with a woeful clearance against Liam Moore and Ricardo Horta struck the decisive blow.
Gareth Southgate's team gave everything to try and take the match to penalties, but they weren't able to add to their solitary win in the competition when it really mattered.
Southgate opted to revert to his strongest possible starting line-up, with the likes of James Ward-Prowse and Nathan Redmond reinstated to the side after missing out against Colombia.
Despite the return of the more experienced players in the Three Lions' squad, it was Portugal who began the brighter, with Helder Costa testing Jack Butland with a powerful effort that the goalkeeoer did well to hold onto inside the opening ten minutes.
England struggled to get out of their own half during the opening quarter, and Butland's goal continued to come under fire as Bruno Fernandes left the crossbar shaking with a swerving effort from 25 yards.
That eventually sparked Southgate's side into life, and Berahino twice went close as he first fired wide from the edge of the area before forcing Bruno Varela into a good save after latching onto a through ball from Nathaniel Chalobah.
From there England finished the half the better of the two sides, with Ward-Prowse curling a free-kick narrowly wide, and they will have been disappointed to go into the break without finding the net.
That dominance continued into the second period, with Redmond firing narrowly wide after cutting inside from the left before Berahino saw a shot superbly blocked by Ruben Semedo with Varela beaten.
Berahino's afternoon soon got even worse as he was at the centre of the comedy defending that led to the game's only goal.
The West Brom man took a touch before looking to clear from inside his own box. Unfortunately for England the ball smashed straight into Liam Moore's back, and Horta had the simplest of tasks to beat Butland from close range.
Southgate threw on Will Keane in search for an equaliser, but other than Ben Gibson's stabbed effort finding the side netting, Portugal were able to hold on with relative ease and secure a place on the podium