Valentino Lazaro curled a delightful finish into the top corner with almost the last kick of the game to ensure Michael O'Neill's men finished without a point at the foot of Group 3 of League B.
Neither side was able to catch promoted Bosnia-Herzegovina and the contest reflected its dead-rubber status until Xaver Schlager's clinical 49th-minute opener.
Corry Evans looked to have given the already-relegated hosts reason to cheer when he ended Northern Ireland's three-match scoreless run with an equaliser, but they were ultimately dealt a fourth successive competitive defeat by Lazaro's perfectly timed first international goal.
Frustration in front of goal had been the prevailing theme of Northern Ireland's campaign and a dull first half offered few solutions.
Evans forced a backpedalling Heinz Lindner to tip over an early deflected effort, while Niall McGinn threatened with a fine free-kick that he curled marginally wide of the near post.
It took a rare moment of attacking quality for the deadlock to be broken as Schlager drove home an unerring left-footed finish across Trevor Carson following David Alaba's clever dummy of Peter Zulj's pass.
The goal only sparked Northern Ireland into action and parity was restored through Evans eight minutes later, the midfielder's shot taking a touch off Martin Hinteregger and leaving Lindner with little chance.
Bayern Munich man Alaba and George Saville both threatened to seize the momentum with near misses at either end, before Lazaro went one better at the death.
Alaba robbed Stuart Dallas of possession and initiated a counter-attack that ended with the 22-year-old guiding expertly beyond Carson.
What does it mean? O'Neill's optimism not without cause
O'Neill insisted he was not left "devastated or despondent" by the three previous Nations League losses and there was enough evidence in this admittedly deflating defeat to give hope for the future.
Though there are areas for improvement - some of which are perhaps beyond the manager's control - Northern Ireland's clear ability to match the teams around them on pure footballing terms suggests they should at least be competitive come the main course of Euro 2020 qualifying.
Alaba's class shines through
With Marko Arnautovic watching from the bench for over 70 minutes, the onus fell upon Alaba to lead Austria's charge. He lived up to expectation, playing a key part in both goals and providing drive from deep.
Dallas caught in two minds
Leeds United boss Marcelo Bielsa has sought to convert Dallas into a full-back and though serviceable enough in that role at Windsor Park, the natural winger appeared a man struggling for clear decision-making when he coughed up the ball and left Northern Ireland exposed in the closing moments.
O'Neill and counterpart Franco Foda both have time to reflect ahead of December's Euro 2020 qualifying draw in Dublin with no matches presently scheduled for either nation.