South Africa scored four tries to one in a comfortable win in Cardiff.
Wales: (6) 16
Con: S Jones
Pens: S Jones (3)
South Africa: (11) 33
Tries: Habana (2), Jantjes, Rossouw
Cons: Bosman (2)
Pens: Montgomery (3)
Stephen Jones and Montgomery scored two first-half penalties each but Bryan Habana's try gave South Africa an 11-6 interval lead.
Habana dived over in similar fashion five minutes after the break and Conrad Jantjes pounced on Sonny Parker's mistake for their third try.
Wales' Ceri Sweeney scored a late try after Montgomery was sent off, but Danie Rossouw hit back for the Boks.
It was a much improved display from Wales following this month's hammering by the All Blacks and one-point win over Fiji, but Mike Ruddock's side again lacked a cutting edge.
The unforced errors which dominated Wales' last two poor displays were immediately evident as number eight Michael Owen knocked on from the kick-off.
South Africa were awarded a penalty from the resulting scrum which Montgomery slotted over for an early lead.
Montgomery then missed a penalty attempt, but the Springboks soon stretched their lead with a classic counter attacking try.
Wales lost possession from a high Stephen Jones kick, giving South Africa a perfect platform to attack an unstructured defence.
A series of phases sucked in the Wales defenders and Jean de Villiers' long pass to the left wing gave Habana plenty of space to dive over.
Jones, who led Wales out as he became the 16th Welshman to win 50 caps, got the home side on the board on 17 minutes with a penalty following decent attacking pressure.
Montgomery and Jones exchanged penalties before the half hour mark and Wales began to look dangerous with captain Gareth Thomas prevalent in midfield.
But before the interval, South Africa were twice denied tries by the narrowest of margins.
First, prop Lawrence Sephaka was prevented from grounding the ball over the tryline by a superb last-ditch tackle by Wales flanker Martyn Williams.
And from the resulting five-metre scrum, centre Jaque Fourie was frustrated by the tough judges' intervention for a forward pass.
South Africa winger Bryan Habana showed his class
There was no such saviour for Wales five minutes after the break though, as Habana pounced for his second try.
One missed tackle by Thomas in midfield was all it took to create the overlap for the flying winger to grab his 15th Test-match try.
Montgomery, who was adopting a ridiculously short run up, again miscued the conversion attempt.
The full-back's misery was compounded soon after when he was yellow-carded for holding back Shane Williams without the ball and then throwing him to the ground.
Wales' numerical advantage lasted only a few minutes, though, as prop Chris Horsman was then sent to the sin-bin for punching.
And five minutes later, South Africa scored the crucial third try when winger Jantjes pounced on the loose ball after Parker had failed to gather Habana's grubber kick.
Debutant fly-half Meyer Bosman took over the converting duties and succeeded where Montgomery had failed, albeit with the aid of a post.
Montgomery returned to slot over another penalty but his afternoon turned sour when he received a second yellow card for a high tackle on Williams.
His tackle on the diminutive winger saved a certain try, but Wales were not to be denied as Williams' inside pass sent Sweeney over for a try, converted by Jones.
Wales threw everything at the visitors in a frantic finish, but South Africa showed their metal to hold firm and added a fourth try when replacement Rossouw wriggled over in the last move of the match.
Wales: Byrne; James, G. Thomas, Parker, S. Williams; S. Jones, Cooper; D. Jones, R. Thomas, Horsman, Gough, Sidoli, Charvis, M. Williams, Owen.
Replacements: Sweeney for Byrne (53), Watkins for Parker (61), M. Davies for R. Thomas (65), Phillips for Cooper (70), A. Jones for Charvis (60).
Not Used: J. Thomas, Evans.
Sin bin: Horsman (53).
South Africa: Montgomery; Jantjes, Fourie, de Villiers, Habana; Bosman, Claassens; Sephaka, Smit, van der Linde, Botha, Matfield, Burger, Smith, Cronje.
Replacements: Russell for Jantjes (75), Barry for de Villiers (75), du Randt for Sephaka (36), Rossouw for Botha (70).
Not Used: Shimange, van den Berg, Conradie.
Sin bin: Montgomery (51).
Sent off: Montgomery (71).
Referee: Stuart Dickinson (Australia).