Raffaele Cretaro ended Derry City's reign as FAI Ford Cup holders with the only goal at the Showgrounds as Sligo Rovers, winners of the competition in 2010 and 2011, advanced to the semi-finals, the draw for which will be made on Monday night.
It marked an unhappy 40th birthday for Derry manager Declan Devine as his side's slump continued with a tenth defeat from their last 14 games in all competitions.
Sligo started the better in difficult conditions of wind and rain and were deservedly in front for what proved the only goal of the game on 15 minutes.
Derry failed to defend a Joseph Ndo free kick into their area and midfielder Cretaro took full advantage of a slip by defender Shane McEleney to back-heel the ball under 'keeper Ger Doherty.
Despite being scarcely in the game, Derry almost levelled on 36 minutes. Barry Molloy's sublime pass put Simon Madden away and the fullback's goal-bound cross had to be palmed away by Gary Rogers.
Derry carved out another chance four minutes into the second half when Madden again put in a good delivery to find Barry McNamee whose effort was blocked by Sligo defender Gavin Peers.
But Sligo responded and should have doubled their lead on 58 minutes. Danny North initially missed a fine cross from man-of-the-match Alan Keane before Aaron Greene blasted over the crossbar.
Derry, who had a last minute penalty appeal waved away by referee Neil Doyle after Keane appeared to have fouled Patterson in the box, threw everything forward at the death to try to salvage their season.
But they couldn't find a way past Rogers who twice saved well from substitute Michael Duffy in stoppage time.