John Gregg's side fell short against Championship side Loughgall
Loughgall beat Institute 3-1 at Drumahoe and by the same score on aggregate to progress to the last eight of the Co-Operative Insurance Cup.
After a scoreless first leg at Lakeview Park, Mattie Burrows fired home the opener from close range on 15 minutes.
Dean Smith made it 2-0 with a penalty on 26 minutes after Burrows had been brought down by Michael Doherty.
Burrows turned the ball in on 66 after David Ogilby's back header fell short and Ogilby netted a consolation on 79.
Burrows was on hand to give the visitors their early lead after Smith's shot had been fumbled by Doherty.
Smith then got on the scoresheet himself and Burrows grabbed his second.
Ogilby scored after Calvin Mooney's free-kick was parried by Marc Robinson, then Robinson saved again from Paddy McLaughlin, before the big defender found the net.
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