Loughgall lost out on the road in Tuesday’s 3-1 reverse by Larne.
The League Cup exit arrived despite Loughgall breaking the deadlock after just nine minutes.
Ciaran Murray found the net for Larne with a low drive that nestled over the line via the upright.
The hosts increased the advantage courtesy of a Paul Maguire finish.
The Villagers cut the gap past the hour mark thanks to substitute John Uprichard.
The former Mid-Ulster Football League forward hit the heights to head home a Stuart Mallen delivery.
However, the next goal arrived for the home side off Michael Smith’s last-gasp solo effort.
Loughgall produced a number of positives to take into tomorrow’s (Saturday’s) home date with Institute from 3 o’clock at Lakeview Park.
It marked a second defeat for Loughgall inside four days as Lurgan Celtic left Lakeview Park with the weekend spoils.
A penalty kick from Chris Lavery proved decisive - with appeals from the Loughgall camp dismissed by referee Damien Basketfield.
The match official deemed Gary Henderson’s sliding challenge on Aaron Haire as a foul approaching the final 12 minutes.
Captain Steven Ferguson returned to the starting line-up and fired goalwards early on without success, with Henderson also attempting to break the deadlock from distance.
Matt McMahon carved out a chance for Warner Mullen then Loughgall had Ferguson to thank for a clearance off the line.
However, the penalty kick proved decisive.