Northern Ireland's Under-21s suffered their third successive defeat in the European Championship qualifiers as they were beaten in Iceland.
Johann Gudmundsson put the home ahead on 57 minutes and Josef Josefsson doubled the lead 14 minutes later.
James Lawrie pulled a goal back 10 minutes from time but Iceland held on complete back-to-back wins over the struggling Irish.
Northern Ireland were beaten by the Czech Republic in their opening game.
Assistant boss Wylie took the reins for Tuesday's as manager Steve Beaglehole is currently with the Under-19 side in Bosnia.
The Irish were hammered 6-2 at home by Iceland last month.
That followed an opening defeat by the Czech Republic and Wylie's squad were under strength after a number of withdrawals from the original panel.
Ballymena United goalkeeper Sean O'Neill won his third cap while Derry City defender James McClean also lined out for the visitors.
Wylie was pleased with the way his side responded after last month's home hammering by the same opposition.
"We deserved a draw at least. We hammered them in the last 10 minutes but could not get that second goal," said Wylie.
"We were very unlucky. We had lots of possession but two mistakes cost us dear and it is hard to take.
"However I cannot fault the players for the quality they showed as well as their effort and commitment."
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