Following a 5-1 capitulation to Vietnam on Tuesday, Malaysia, the 2009 and 2011 SEA Games football champions, desperately needed a win to stay in contention to qualify from Group B of the 2015 SEA Games football tournament.
However, Thailand dealt Ong Kim Swee's men a 1-0 defeat at Bishan Stadium on Thursday afternoon with the winning goal scored in the 81st minute by captain Sarach Yooyen.
The Malaysians came steaming out of the blocks and as early as the second minute had a shot on target as Amirul Awang Kechik cut in from the left to curl a shot that was saved by goalkeeper Chanin Sae-Ear.
Malaysian midfield enforcer Gary Robbat also missed a gilt-edged chance in the first-half when he scuffed his shot wide after being put clean through on goal.
The War Elephants' diminutive playmaker Chanathip Songkrasin also had the raucous crowd on their feet after a strong run past two players before setting up a chance that compatriot Nurul Sriyankem headed straight at the goalkeeper.
With nine minutes left, Thailand captain Sarach Yooyen then left Malaysia's hopes of qualification hanging by a thread when he broke the deadlock with a fine left-footed shot from range.
Thailand now top Group B with a maximum of nine points from three games but with Vietnam playing unfancied Laos later on Thursday night, the Vietnamese could lead to the top of the standings by virtue of their superior goal difference.
Malaysia have three points from three games and are fourth in the table. The Young Tigers need to beat Brunei next Monday and Laos next Thursday to have any chance of advancing to the semi-finals.