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Coming into the final Group B clash, the Falconets knew only victory would give them a chance of progressing to the quarter-final, and even then they were dependent on the game between Japan and Canada.
Nigeria, needing a nine-goal swing to overtake the Spain in second place, went down after seven minutes when Alba Redondo punished the Falconets for poor defending.
The Europeans were left to rue that their misses miss 12 minutes from time, Ihezuo firing home after a defensive mix-up between Carmen Menayo and Marta Cazalla.
Japan finished as Group B winner with six points after dismissing Canada 5-0 at the National Football Stadium, Port Moresby