Canada lost 94-73 to Serbia on Wednesday, a defeat that consigned the Canadians to the classification round at the FIBA under-19 men's basketball world championship.
Serbia improved to 4-2 while Canada fell to 2-4 and will now compete for ninth through 12th place at the 16-team tournament.
"I'm really proud of our guys and how they'd try to stick together even though we played some tough competition," said Canada's head coach Greg Francis.
"Nothing came easy for us. But at the same time, the guys tried to stick together and tried to fight as a good Canadian team should."
Canada finished seventh at the 2009 tournament in New Zealand and was ranked sixth in the latest FIBA world rankings, compared to No. 3 for Serbia.
Montreal's Junior Lomomba led Canada with 14 points while seven-foot-four Sim Bhullar of Toronto contributed 11 points.
Djordje Drenovac had 14 points for Serbia, which led 23-14 after the first quarter and 47-26 at the half.
The Serbians shot the ball well, connecting on 59.1 percent of their shots, including an impressive 8-of-14 from behind the three-point line.
In contrast, Canada shot the ball well at 46 per cent, but just 6-of-24 from beyond the arc.
Canada had needed a victory over Serbia, combined with a win by Croatia over the U.S., to advance to the quarter-finals.
Canada's next game will be on Friday.