Noel King's men put up a spirited show in Dundalk but were not able to get a positive result, with Matthew Doherty's 70th-minute goal their solitary response to Francisco Junior's opener and Miguel Lourenco's header.
There was little home keeper Sean McDermott could have done about Junior's goal, with the Everton man drilling in a vicious right-foot shot from just inside the area after club team-mate Shane Duffy's clearance fell to him.
Sean Murray twice went close to pulling Ireland level but Portugal returned to the front foot after the break, with Luis Gustavo working McDermott.
One goal turned into two with 57 minutes gone, with Lourenco nodding in a Gustavo corner, although replays suggested it could have been an own goal off Aiden O'Brien.
Wolves' Doherty would give Ireland hope with a header from a Murray corner but the closest they went was a snap-shot from Graham Burke which went wide.