A late Maor Buzaglo strike broke Southampton hearts as Hapoel Be'er Sheva booked their place in the last 32 of the Europa League in place of Claude Puel's men.
Southampton came into the game knowing a win or a 0-0 draw would seal their place in the knockout stages, but their resolve was broken with just 12 minutes remaining on the clock.
After a defensive mix-up from the English side, the ball fell to Buzaglo just outside the box, with the Israeli midfielder unleashing an unstoppable drive past Fraser Forster.
Virgil van Dijk scored late on to provide some drama, but Southampton were sent crashing out of Europe.