England Women chances of winning the SheBelieves Cup were ended as Germany scored twice in the last 15 minutes to record a 2-1 win in Nashville.
An own goal from Gilly Flaherty and Babett Peter's controversial penalty turned the game on its head after England had led since Toni Duggan's ninth-minute header.
It leaves Mark Sampson's side winless from their two games ahead of their final round-robin game on Wednesday against France, who have also suffered two defeats.
This was the second meeting between the sides since England's 1-0 victory in the World Cup third-place play-off last summer, with the teams drawing 0-0 in November's friendly.
It took just nine minutes for the deadlock to be broken this time.
Alex Greenwood's cross from the right found Duggan who flicked a header into the far corner - the first goal Germany had conceded in 560 minutes.
Germany should have levelled a minute before the break after Karen Bardsley palmed a cross out to Isabel Kerschowski, but England skipper Steph Houghton did enough to put the Germany striker off.
England went close in the second period but Alex Scott could not direct Demi Stokes' cross on target.
Mandy Islacker had the ball in the net for Germany in the 74th minute but was flagged offside b ut Germany were level two minutes later as Sara Dabritz's right-wing cross deflected off Flaherty and past Bardsley at her near post.
And with nine minutes left Germany snatched victory. Fara Williams - on her 150th appearance for England - was adjudged to have fouled Popp and Peter sent the spot-kick low to Bardsley's right.
England coach Sampson was furious with the officials following the defeat.
He told BBC One: "It's tough to take. That's two games in a row when we've had stonewall penalties not given to us and a ridiculous penalty against us. The officials aren't good enough.
"There were a lot of good things in that game. I've got absolute pride in my players. The decision cost us."