Eoin Doyle's brace inside the hour had put the hosts in control, before Jamie Murphy netted two of own to level matters 10 minutes from time.
Robert McHugh fired Motherwell's winner with 87 minutes on the clock before Hibs lost James McPake during injury time after collecting a second yellow card.
And a disappointed Hibs' boss Fenlon said: "We stopped playing after the second goal, we dropped too deep instead of trying to retain the ball and got punished for it.
"I thought the first yellow-card was harsh and I would like to see the second one again. I am disappointed at losing."
He also denied that withdrawing his two strikers - Lee Griffiths and Doyle - was the reason for allowing Motherwell back into the game.
He added: "We were well under the cosh before we brought Lee off to be honest.
"I don't think Lee did well today. The idea was to bring an extra midfielder on to try and get us on the ball a bit more."