The Green and White Army were dreaming of one of the most famous results in their history when Josh Magennis headed them in front with 75 minutes gone at De Kuip in Rotterdam.
But Memphis Depay levelled five minutes later and then wrapped things up with the second of two stoppage-time goals after Luuk De Jong put Holland in front.
The 3-1 defeat was a gut-wrenching turnaround for Northern Ireland, who had said from the outset the minimum requirement was four points from their doubleheader with the Dutch, who are due in Belfast next month.
Instead, they are left chasing an unlikely maximum haul against Holland at Windsor Park and Germany in Frankfurt, leaving a play-off place a more likely hope.
“You don’t need to be a mathematician to see we need six points and it’s going to be very difficult,” O’Neill said.
“They are devastated in the dressing room. We knew the significance of a point here, we knew the significance of three points but to come away with nothing, we have to look to the final two games.”
Devastated was a word O’Neill used more than once in describing Northern Ireland’s mood at the end of a match in which they had executed their game plan admirably, using a high press to disrupt Holland’s game.
For long periods, they frustrated the hosts and put the pressure on the shoulders of a young team wanting to ensure the Dutch do not fail to reach a third major tournament in a row.
“It was very hard on us to lose two goals so late in the game, having defended for so long and gone ahead in the game,” O’Neill said.
“It was a combination of fatigue on our part and the quality of the opposition.
“They were able to make substitutions that strengthened them and that ultimately proved to be the difference.”
Ronald Koeman had described Magennis’s goal as like an “axe in the neck” for Holland but was proud of the way they picked themselves up.
“We couldn’t really fight them,” he said. “We had a lot of possession but we were not able to do much and we got sloppy.
“It was difficult with the time-wasting and the fouls but we must have respect for them. They have less quality but they’ve got the maximum results for what they have.”
O’Neill pointed to the lack of depth in his squad, with Koeman able to introduce De Jong, Donyell Malen and Donny Van De Beek late on while he turned to Magennis, Jordan Thompson and Tom Flanagan.
“They bring on players like Malen and De Jong and Van De Beek who has been courted by clubs all over Europe, and we brought on two lads who play in the English League One,” O’Neill said.
“Hopefully people recognise that. It was a fantastic performance but ultimately one that was disappointing in the end.
“We don’t want to be a team that pats ourself on the back and say we came here and did well but we lost. We want to be a team that’s better than that.”