Israel failed to return to the Davis Cup group stage after going down 3-2 in a promotion playoff against Canada at Ramat Hasharon.
The match got off to a bad start for Israel when top seed Dudi Sela (96) was beaten in a five-set thriller against Vasek Pospisil (124).
Ranked 96 in the world, Sela lost the first set 7-4 on a tie-break but he rallied to take the second set on a tie-break, 8-6.
Pospisil stepped up a gear to win the third set 6-1 but a spirited Sela hit back to take the fourth 6-2 on another tie-break.
But there was one final twist in a see-saw encounter as Pospisil made a decisive break in the decider to win 6-3.
Match two was also a thrilling affair as Amir Weintraub (182) pulled off a major upset against Milos Raonic (31).
Weintraub showed great character to bounce back after losing the opening set 7-5. He produced the performance of his life to win 7-5, 6-3, 6-1.
With the tie all-square, Israel fell behind after the doubles as Andy Ram and Jonathan Erlich were beaten in four sets by Daniel Nestor and Pospisil.
Needing to win to keep the tie alive going into the reverse singles, Sela made easy work of Peter Polansky (573), winning 6-3, 6-3, 6-3.
The deciding match saw Weintraub unable to repeat his earlier heroics as he went down 6-2, 7-6 (7-3), 6-4 against Pospisil.