The "Blade Runner" had never been beaten over 200 meters until Brazilian sprinter Alan Oliveira came storming down the home straight to win by 0.07 seconds and dethrone the icon of the Paralympics.
Pistorius later accused Oliveira of bending the rules.
Having won his own legal battle to compete wearing carbon-fiber blades alongside able-bodied rivals, Pistorius suggested that Oliveira ran with longer prosthetics than should be allowed.
Oliveira won in 21.45 seconds after overtaking Pistorius at the line at Olympic Stadium in front of a capacity 80,000-strong crowd.
"Not taking away from Alan's performance - he's a great athlete - but these guys are a lot taller and you can't compete (with the) stride length," Pistorius said in a broadcast interview. "You saw how far he came back. We aren't racing a fair race. I gave it my best. The IPC (International Paralympic Committee) have their regulations. The regulations (allow) that athletes can make themselves unbelievably high.
"We've tried to address the issue with them in the weeks up to this and it's just been falling on deaf ears."
For Pistorius, it is "ridiculous" that Oliveira could win after being eight meters adrift at the 100-meter mark.
"He's never run a 21-second race and I don't think he's a 21-second athlete," Pistorius said. "I've never lost a 200-meter race in my career."
Oliveira insisted he had not broken the rules, and expressed disappointment with Pistorius' criticism.
"He is a really great idol, and to listen to that coming from a really great athlete is really difficult," Oliveira said through a translator. "I don't know who he's picking a fight with, it's not with me."
Oliveira was backed by Paralympic leaders.
"There is a rule in place regarding the length of the blades, which is determined by a formula based on the height and dynamics of the athlete," the IPC said in a statement. "All athletes were measured today prior to competition by a classifier and all were approved for competition."
IPC officials met with Pistorius after the race.
"He wanted to voice his concerns and we listened to those concerns," said IPC spokesman Craig Spence, one of three people to meet with Pistorius. "The IPC will meet with Oscar at a later date to discuss his concerns once the emotion of tonight is out of the way."
The second half of Pistorius' year in London is not running to script.
At the start of last month, the South African reached the 400 semifinals and the 1,600 relay final. Competing at the Olympics was some achievement alone, though the medals were meant to come at the Paralympics.
He was hoping to go one better than the trio of golds he won in Beijing, but can still leave London with the same haul.
Next up is the 400 relay Wednesday before he tries to defends his titles in the 100 on Thursday and 400 on Saturday.