A second consecutive defeat in the competition places the Cubs at risk of elimination at the group stage
Two second-half goals from Alrashidi Yafehsim was enough for Kuwait to overcome the Cubs who were hoping to make the knockout stages at the Games, held in Nanjing, China.
Alrashidi struck in the 48th minute before doubling the tally five minutes later against the Singapore side led by former J-League player Takuma Koga, and also featuring Ikhsan Fandi Ahmad.
Singapore lost to Iraq in the Group B opening match on Tuesday, going down 2-1 after Ikhsan had handed the Cubs the lead in the 6th minute. Mohanad Alshammari's efforts on the 31st and 43rd minute however, ensured the Singapore side started on a losing note.
Iraq, who also played on Thursday, lost 2-0 to South Korea on Thursday, allowing the South Koreans to seal a place in the knockout stages. The top two teams from each group qualify and Singapore are at the foot of the four-team table with no points so far.
However, the Cubs still retain a chance of qualification if they manage to overcome South Korea on Saturday in the final group game, and either Kuwait or Iraq lose.