Llanelli's dream of a place in the Champions League second round was shattered at FK Ventspils.
The Reds went into the first round, second-leg 1-0 ahead, but the Latvian hosts were comfortable winners.
Jevgenijs Kosmacovs opened the scoring after 28 minutes and striker Vits Rimkus scored his first goal two minutes later.
Second-half defensive blunders allowed Andrei Butrik and Rimkus to send the Reds home empty-handed.
Llanelli manager Peter Nicholas said: "It's the first time we've been in the tournament and to win one game out of two - well maybe you look at that and say it's okay.
"I think we deserved to win the first game, but we were poor in this game - very poor.
"I'm disappointed with the goals we gave away and there's no point hiding from the fact that it was a problem.
"We had some great opportunities in the first 25 minutes from Andy Legg's throw-in, but after that Ventspils started to play well and I've been very impressed with them."
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