Arjen Robben scored a dramatic late winner to destroy what looked like being an impressive comeback by England after the home side had earlier fallen 2-0 behind at Wembley.
Former Chelsea winger Robben struck in injury time to deny England after they had scored twice in the last five minutes to grab what looked like being a creditable draw in caretaker manager Stuart Pearce's first, and perhaps only, game in charge.
After a rather drab first half, the game's second 45 minutes was packed full of incident. It was Robben. now with Bayern Munich, who netted the opener after being allowed far too much space to burst forward from his own half. Robben galloped through the middle without any England defender offering-up a tackle before taking what he was given and finishing with a low left-footed drive past goalkeeper Joe Hart.
The Dutch doubled their lead through Klaas-Jan Huntelaar's typically powerful header after a perfectly placed cross from Liverpool forward Dirk Kuyt. Huntelaar found space in between the England defense and got up strongly to nod home, nastily clashing heads with defender Chris Smalling in the process.
England gave themselves some hope, though, through defender Gary Cahill's well-taken goal five minutes from time. The Chelsea defender found himself in unlikely territory in the Dutch area, but he produced a neat turn onto his right foot and then coolly struck the ball past Maarten Stekelenburg.
Then with normal time remaining England seemed to have salvaged the match with another impressive strike, this time from Ashley Young. Substitute Phil Jones played a clinical through ball that left his Manchester United team-mate one-on-one with the goalkeeper and Young coolly lifted the ball over Stekelenburg to tie things up at 2-2.
But just as England were celebrating getting level, Robben pooped up to register his second goal of the match and secure victory for the Dutch. With England seemingly yet to readjust after the jubilation of just scoring, Robben received the ball at the back post and was allowed far too much time to cut back onto his dangerous left foot. Though the shot was heading toward goal, it received able assistance from a Cahill deflection that left Hart with no chance.