The 24-year-old open the scoring inside 22 minutes with a thunderous strike, but goals from Nicolas N'Koulou and Vincent Aboubakar's ensured Hugo Broos's side would take the crown.
And despite the north Africans' second-place finish in the tournament, Arsenal remained proud of the midfielder in spite of his disappointment in the final.
''It just wasn't meant to be for Mo and Egypt tonight. We're proud of your efforts," the club tweeted.
Elneny’s return to the Emirates Stadium will come as a relief for Arsene Wenger, whose side crashed to a 3-1 defeat to Chelsea on Saturday.
With Aaron Ramsey and Santi Cazorla injured, plus Granit Xhaka suspended, the Gunners are short in the middle of midfield.
The Gunners, fourth in the Premier League table with 47 points, host Hull City on February 11 as they look to recover from the defeat to Antonio Conte's Blues.