Sam Morrow's first-half goal saw Northern Ireland's youngsters to victory at Llanelli's Stebonheath Park.
After an early Craig Davies chance for Wales the visitors got the upper hand, skipper Sammy Clingan to the fore.
Richard Clarke and Rory McArdle went close, before David Scullion made space on the left for a low cross that Morrow put past Sam Pearce from close range.
Wales improved after the break, Shaun MacDonald and Davies going close, but the Irish held on for a narrow win.
The result stretched their unbeaten run to nine games to boost them ahead of their Uefa Championship qualifier against Liechtenstein.
Wales, who blooded seven Under-19 players in an experimental squad, must hope they play better in their crucial two-leg qualifier against Estonia in May.
Wales Under-21 manager Brian Flynn:
"That was pretty average, I wanted the team to express themselves but we didn't create and had no cutting edge.
"We've lost players to the senior squad, but that should have opened up a great chance for others to make a name for themselves.
"On the night Ireland deserved the win, not enough of my side were able to take the step up.
"This is one step below senior international football, collectively and individually we have to be better.
"There aren't many positives, but we'll be better for the next game."
Wales U21: Pearce, Lawless (Marc Williams 84), Wiggins (Jacobson 87), Mackin (Rob Davies 56), Adam Davies, Mike Williams, Arron Davies, Hughes (Easter 46), MacDonald (James 56), Craig Davies (Pritchard 74), Calliste.
Subs Not Used: fon Williams.
Booked: Craig Davies.
N Ireland U21: McGovern, Sean Ward, Hughes, Clarke (McVey 66), McCrystal, McArdle, Gilfillan (Ervin 46), Clingan, Scullion (Friars 71), Lafferty (Smylie 84), Morrow (Stewart 87).
Subs Not Used: Willis, Lindsay, McCaffrey, Jamie Ward, McGowan.
Goals: Morrow 24.
Ref: C Murray (Scotland).