Olivia Price, 20, slipped from the back during a tacking manoeuvre in winds up to 27 knots during the third of five head-to-head races with the Spanish.
Price was sitting at the back of the boat, and her fellow sailors didn't notice that she'd gone at first as they desperately tried to stop their craft from capsizing.
The skipper desperately tried to swim aboard, but with strong winds and choppy seas she soon found herself miles away from the boat.
Luckily for her, colleagues Nina Curtis and Lucinda Whitty decided to turn back and pick her up, but they lost valuable minutes as they hauled her back on board and ended up losing the race to trail 2-1.
It could have been worse, though: in any other Olympic class, Australia's mishap would have meant a capsize but the heavy 6-metre Elliot keelboat stayed upright.
Fair play to the Aussies, though: they picked themselves up and got straight back into it, winning the next race to level things at 2-2 and force a decider.
But it was not to be: Spain's 2011 European Champions Tamara Echegoyen Dominguez, Sofia Toro Prieto Puga and Angela Pumariega Menendez won the deciding fifth race by a clear 100 metres to take the gold - and Price was left knowing that her dunk in the English channel ended up being decisive.
Price saw the funny side afterwards, joking that she might have a future in the beleaguered Australian swimming team.
"I decided I was not going to hold on quite enough and fell out of the boat," she deadpanned.
Her father Rob paid tribute to his daughter's gutsy effort in almost coming back to win.
"The girls were absolutely bullet-proof," he said. "Amazing. To lose a crew, go one down, and then bring it back to two-all.... and they just took it on. They took it on and were so close. But, well, silver medal."
Eurosport / Reuters
- Sports & Recreation