But coach Michael Matricciani takes pride in a stellar season that Melbourne can celebrate, despite a loss that could mark a final appearance in City colours for some of his stars, including striker Holly McNamara.
City sealed a domestic premiership-championship double with Saturday's 2-1 A-League Women grand final win over Wellington.
But Tokyo scored two goals in the opening 10 minutes in Suwon on Wednesday to bring City back down to earth and leave Matricciani's charges with an uphill battle to qualify for the final.
City fought their way back into the contest and the excellent Aideen Keane scored in the 37th minute, before Yuzuho Shiokoshi's second goal in the 78th minute snuffed out the comeback in teeming rain at the Suwon Sports Complex.
"First of all, just want to congratulate Tokyo on a really good match. I think the best team won on the night, and I wish them all the best in the final," Matricciani said.
"For us, we obviously started quite poorly. We conceded those two early goals, and then we built ourselves into the match, but it wasn't to be.
"Overall we're really proud of our performances throughout this campaign and our domestic campaign, winning the double.
"We're excited that we re-qualified for this beautiful competition, and we look forward to competing again next season."
The defeat was probably the final time some of City's players, headlined by star striker McNamara, play for the club in the foreseeable future given expected interest from overseas clubs.
Matildas striker and back-to-back A-League Women golden boot McNamara is clearly ready for the next step.
The likes of Laura Hughes and Alexia Apostolakis could also be on the move, and contracted Leticia McKenna could attract interest.
Tokyo snatched the lead in the fourth minute on Wednesday when City failed to clear a cross and Shino Matsuda teed up Shiokoshi to tap home.
For Tokyo's second, just six minutes later, Shiokoshi hit the post and Miharu Shinjo reacted quickest to bury the rebound.
The second goal woke City up and they worked their way back into the game.
With winger Keane dominant and McNamara looking dangerous, City started to create chances at will and hit back for a corner.
McNamara was taken out at the corner, but the ball from McKenna spilled to skipper Rebekah Stott, whose shot was met by Keane to poke home.
City kept their foot down in the second half, chasing an equaliser.
Matricciani went all-out in attack in chase of an equaliser, turning to Bryleeh Henry, Chinaza Uchendu and Danella Butrus off the bench, but City couldn't find another opening.
Then City were caught open defensively and hit with a sucker punch, with Shiokoshi burying her second to effectively call the game.
City, who lost last year's final, have already qualified for next year's WACL as A-League Women premiers.
In the final, Tokyo will play the winner of Wednesday night's semi-final between North Korean outfit Naegohyang Women's FC and Suwon FC Women.
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