Johnny Russell had put Scotland ahead in the 74th minute after Tony Watt cancelled out an early opener but Billy Stark's side could only hold on to their lead for 90 seconds.
And Raphael Holzhauser scored on the counter-attack as Scotland threw men forward in a bid to secure a last-gasp winner at the Cashback Arena in Altach.
Scotland had gone into the game assured of second place behind Group 10 winners Holland but only the four best runners-up join the top teams in the play-offs for next summer's finals in Israel, and they had to throw caution to the wind in the final stages as a draw would not have been enough.
Having lost Jordan Rhodes and James Forrest to the senior squad, and Gary Mackay-Steven to a knee injury, Stark was deprived of another attacking option when Leigh Griffiths pulled out through illness after scoring in Thursday's 3-0 win over Luxembourg.
But the in-form Watt came in after scoring off the bench at St Mirren Park with David Wotherspoon returning from suspension to replace Rhys McCabe.
Austria's hopes had ended with defeat by Holland on Friday but they started on the front foot and Michael Gregoritsch headed into the roof of the net in the eighth minute after getting in front of Ryan Jack to meet an in-swinging cross from the right.
Scotland struggled to mount any attacks in the opening quarter and Andreas Weimann had a sight of goal when Gregoritsch headed on a diagonal ball but the Aston Villa forward hit the side-netting.
Wiemann then had a half-hearted appeal for a penalty as he failed to convert Stefan Schwab's left-wing cross under a sliding challenge from Danny Wilson.
Scotland came into the game around the half-hour mark and Watt was just beaten to Wotherspoon's header across goal before Russell missed a great chance.
Paul Hanlon cut in from the left and played the ball beyond the home defence but Russell could not get a decent contact and the home keeper gratefully collected.
Scott Allan fired just over from 30 yards but Scotland had a let-off before the break when Schwab mis-kicked Weimann's cutback from 12 yards.
Schwab headed wide following a corner just after the break but Scotland began to push back their opponents and were level in the 54th minute. Russell leapt brilliantly to head on Wilson's long free-kick and Watt reacted quickly to head over the onrushing goalkeeper.
Scotland brought on Peter Pawlett for Allan but they were almost caught out by a long ball as Wiemann headed wide.
Scotland survived a spell of pressure and stunned the hosts in the 74th minute when Watt got round the outside of his man on the left and drove the ball into the goalmouth.
The Austrian goalkeeper fumbled and Russell bundled the ball over the line.
But just like their 2-2 draw in Bulgaria in May, Scotland lost an instant equaliser. Ross Perry failed to deal with a cross from the left and the ball spun off his knee and fell for Weimann, who dived to head home from six yards.
Hanlon soon came close with a 35-yard lob with the keeper stranded after a challenge with Watt and Scotland pressed in the final 10 minutes.
Watt had a sight of goal from a tight angle but was torn between shooting and crossing and the keeper held his effort.
And Scotland's hopes evaporated just after the 90 minutes were up.
Substitute Gregg Wylde lost the ball on the left wing and Austria broke quickly to set up a two-against-two before Holzhauser ran into the box and fired across Jordan Archer and into the far corner.
Wales under-21s' 2013 European Championship qualification campaign, meanwhile, ended on a disappointing note as they were hammered 5-0 by Group Three winners Czech Republic in Jablonec nad Nisou.
Geraint Williams' side could no longer advance from the group after their home defeat to Armenia last month, but had been looking to end the campaign with a good performance.
But, after a bright start, those hopes were firmly dashed as Filip Novak, Tomas Wagner, Ondrej Vanek and Stanislav Tecl (twice) helped the hosts to an emphatic win.
Billy Bodin had fired wide of the target when well placed during the early stages for the visitors, with Jake Cassidy another to waste a decent chance.
And once the Czechs got into their stride those misses proved costly.
They took the lead in the 17th minute as Novak found the net after the visitors failed to clear a corner.
Wales held their own until the hour mark but matters went rapidly downhill once Wagner doubled the home side's lead.
Vanek then tapped in the third after goalkeeper Dai Cornell had done well to keep out Pavel Cmov's shot.
Tecl then rounded off the scoring as he netted from the spot after Adam Henley had fouled him, before bagging the fifth with 11 minutes remaining.
Wales were even denied a late consolation as Jake Taylor saw his effort saved.
And Northern Ireland Under-21s ended their campaign with a sixth straight defeat as they went down 3-0 against Denmark in Aalborg.
The home side scored all three goals before half-time as they secured second place in Group 4, with Northern Ireland second bottom with just four points.
The pick of the goals was scored in first-half injury time by Andreas Laudrup, son of Swansea boss Michael.
Northern Ireland's evening got off to a disappointing start, Odense midfielder Emil Larsen putting the home side ahead with the first significant chance of the match with just eight minutes on the clock.
Accrington striker James Gray attempted to bring his side back into it fives minutes later only to see his shot blocked, while Matty Ball sent his free-kick wide moments later.
Denmark had attempts of their own but, one save from Ross Glendinning aside, were struggling to locate the target.
Josh Magennis gave them a helping hand when he conceded a 28th-minute penalty, allowing Denmark captain Mads Albaek to roll home his side's second.
The Aberdeen full-back had a chance to make amends with a free-kick of his own but could not beat the wall.
Simon Makienok had a three attempts to extend the home advantage but was unsuccessful and paid by being hauled off at half-time.
By that point it was already 3-0, though, Laudrup defeating Glendinning in added time with a wonderful finish.
With the result safe the hosts slowed down in the second period, while Northern Ireland picked themselves up and started enjoying more possession.
Neither goalkeeper was having to work too hard and a string of substitutions disrupted things further.
But it was Northern Ireland's replacements who looked most likely to get them a consolation.
Matt McClure tried his luck with 10 minutes to go and Billy Kee headed straight at the Frederik Ronnow from six yards after getting on the end of a floated cross by Seanan Clucas.
- Tony Watt
- Johnny Russell