Zulte Waregem grabbed the advantage in Group D as they turned the game around at the Wigan Athletic Stadium after Latics initially took the lead through Leon Barnett just seven minutes in.
Thorgan Hazard, brother of Chelsea's Eden Hazard, saw his powerful effort level the scores on 37 minutes and two minutes from time Junior Malanda dealt a sickening blow to an otherwise strong Latics performance when his left footed effort inside the area clinched Zulte Waregem all three points.
Owen Coyle reverted his side to one familiar with the opening match days of the Europa League group stages, as Nick Powell spearheaded the attack, with Callum McManaman and James McClean playing on either wing.
It was a motivated start from Latics, knowing that a victory would see them through to the round of 32 following NK Maribor's 1-1 draw earlier in the night against Rubin Kazan.
A free kick just over a minute in set the tone for the first half an hour, as Jordi Gomez's delicate ball to the edge of the six yard box set up Emmerson Boyce, but the skipper missed the ball as he ran in, with it falling awkwardly behind him for Thomas Rogne.
The Norwegian defender couldn't adjust himself and the ball dropped into the grateful hands of Zulte Waregem goalkeeper Sammy Bossut.
Latics fans didn't have to wait for long though for the opening goal as a Latics corner led to a well placed finish from Leon Barnett.
Eight corners were won by the home side in the first half and they made an early one pay, with McManaman taking the initial kick as the ball was helped on by Gomez into the path of Barnett who simply slotted home into the bottom left corner from around 10 yards.
Six minutes later McManaman's dart across the area almost resulted in a second goal, but a smart low stop by Bossut kept the winger out.
The pressure continued and next up it was McClean to test the gloves of Bossut as Powell played him in down the left, with the finger tips of the keeper prevented McClean shot across goal from the left side.
McClean had Powell and Gomez open in support and on another occasion may have played them clear in on goal.
With the shot and corner count rising, Latics were dealt a hammer blow by Thorgan Hazard and co when their counter attack on 37 minutes led to an equalising goal.
Sven Kums fed Hazard into the area down the right side and with a swift and fierce effort, the Chelsea loanee's effort was spilled between the hands of Lee Nicholls who tried to hold onto the shot.
The goal set up an enthralling prospect for the second half as both sides looked determined to grab all three points.
A flurry of yellow cards for both sides and a few opportunistic half chances gave the start of the second half a cagey feel, but Powell managed to muster Latics' best chance when Gomez teed him up inside the area only for his effort to be met by the fists of the excellent Bossut.
McArthur was the only other Latics man to come close to making it 2-1 when his effort from outside the area trickled narrowly wide of the left post, but with two minutes remaining the away side sent their 650 or so band of supporters into a frenzy.
Hold up play from Idrissa Sylla inside the area allowed Junior Malanda to make strides into the box and as substitute Sylla played the ball back, Malanda whipped his left footed effort to Nicholls' right, giving Zulte Waregem a precious lead.
Despite a late change with Grant Holt coming on for McArthur, Latics couldn't force their way back onto level terms, leaving the future of Europa League Group D firmly in the balance.