Chris Adcock and Imogen Bankier saw their London 2012 medal hopes all but end as they slumped to a second badminton defeat at Wembley Arena.
The Great Britain mixed doubles pair again failed to build on a superb start and went down 11-21 21-17 21-14 to Germans Michael Fuchs and Birgit Michels.
They now have only the slimmest chance of reaching the quarter-finals, and it initially requires Russians Alexandr Nikolaenko and Valeria Sorokina to pull off an unlikely win over world number one team Zhang Nan and Zhao Yunlei.
Adcock and Bankier would then need to beat the Chinese themselves in their final match of Group A on Tuesday and hope for another favour from the Russian duo.
It has been a disappointing Olympic debut for the Anglo-Scottish pair, who arrived with high hopes after reaching the World Championship final at the same venue last year.
Yet while Adcock and Bankier, 10th in the world rankings, fed off the support of the vociferous home crowd to establish an early lead, they were unable to maintain momentum.
As in their opener against the Russians, they played to their fast-paced, attacking strengths in the first game but were unable to adapt when their opponents slowed the pace.
Michels also started to control more rallies and although the Britons showed some resilience early in the third game, the Germans edged away.
Adcock conceded the pair had underperformed and was resigned to a premature exit. The 23-year-old said: "I'm devastated. This is the Olympic Games and we have lost two winnable games.
"We have worked so hard to get here and we knew we had a chance of progressing. We haven't done that now but we have still got one more game and we want to give the crowd that have worked so hard for us a win. I don't know whether we can progress - it is up to the maths to decide that, but we want to give the crowd what they want."
Adcock was at a loss to explain how he and Bankier had allowed the German world number 22s to claw their way back into the 62-minute contest.
The Nottingham player said: "I don't know, maybe it is something we need to look at. We've started brilliantly in the first two games and then not got off to good starts in the seconds. Maybe it is our tactics, maybe it is theirs. They managed to grind back into it and get their rhythm. I'm gutted, obviously."