Top referee Pierluigi Collina was at the centre of controversy as Everton's association with the Champions League ended in heartache.
The Italian official chalked off Duncan Ferguson's header in the 80th minute for an infringement involving his team-mate Marcus Bent.
Bent, who shrugged off an ankle injury to play, was adjudged to be guilty of barging as the ball came in.
Had the goal stood it would have levelled the scores up in this third qualifying round game against Villarreal.
Everton manager David Moyes could not disguise his anger at the decision.
"It was a definite goal by us," he said after the 4-2 aggregate defeat at the hands of the Spanish side.
