The reigning world champions were hoping for redemption after crumbling 8-1 to England U20 team in their first game, but a momentary loss of concentration saw them bow to Amir Hossein Peyrovani's side.
Only 24 hours after Adam Armstrong smashed a superb hat-trick, the England Under-20s crashed to a 2-1 defeat at the hands of hosts South Korea in their second game of the Continental Cup.
Manu Garba's team was broken in the 19th minute when Young Lions' captain Taylor Moore opened the floodgate.
Thereafter, the Eaglets defence caved under waves of attack as Chelsea forward Dominic Solanke and Armstrong added two goals in the 25th and 28th minute.
Five Nigerian-born youngsters: Fikayo Tomori (Chelsea), Liverpool's Ovie Ejaria, Josh Onomah of Tottenham; Charlton Athletic's Ademola Lookman and Chelsea's Solanke all played for England in the match.
Youhyeon Lee equalised for hosts South Korea after 30 minutes, before Lee added the victor with 20 minutes remaining.
News24 reported that the Nigeria Football Federation explained why it decided that the U17 National Team, Golden Eaglets, participate in the 2016 U19 Suwon Continental Cup tournament.