The Reds' 2-1 loss at Hanoi FC on Wednesday jmeans the three-times winners cannot qualify for the last 16.
Pham Tuan Hai's 87th minute penalty condemned Maciej Skorza's side to defeat when they needed a win to have any hope of claiming one of the three best runners-up berths available in the knockout rounds.
Urawa, who defeated Saudi Arabia's Al-Hilal in the 2022 final in May, endured a dismal campaign and had already missed out on automatic qualification after South Korea's Pohang Steelers had claimed top spot in Group J.
Only the 10 group winners across the competition are certain to progress to the knockout rounds, where they will be joined by the three best runners-up from the western and eastern halves of the continent.
Alex Scholz had a 10th minute penalty saved by Nguyen Van Hoang to set the tone for a poor performance from Urawa, who then went behind in the 53rd minute through Dao Van Nam's close range header.
Bryan Linssen levelled the scores with a first-time finish between the legs of Van Hoang from inside the six yard box in the 65th minute, leaving the Japanese side with time to claim the winner.
But the decisive goal came at the other end when Tuan Hai struck from the penalty spot after Nguyen Hai Long had been hauled down by Takuya Ogiwara.
Urawa finished second in Group J behind Pohang, who were held to a 1-1 draw by Chinese Super League side Wuhan Three Towns in the evening's other match.
However, Urawa's seven points from six games will not be enough to see them take one of the runners-up spots in the draw, which will be held in Kuala Lumpur on December 28.
The remaining fixtures in the final round of group games for clubs in the eastern half of the Asian Champions League will be played next Tuesday and Wednesday with Japan's Kawasaki Frontale and Bangkok United from Thailand already qualified.
Australia's representatives Melbourne City must beat China's Zhejiang on December 12 and hope other results go their way. They are behind group leaders Ventforet Kofu of Japan on goals scored, and also a point behind in the second-place rankings.
Saudi Pro League quartet Al-Nassr, Al-Hilal, Al-Ittihad and Al-Fayha have confirmed their places in the last 16 in the west alongside Uzbekistan duo Nasaf and Navbahor, Al-Ain of the United Arab Emirates and Sepahan from Iran.
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