Valencia 2-1 Arsenal
Arsenal's Champions League campaign came to a miserable end in Valencia as the Gunners subsided to a 2-1 defeat.
John Carew - whose goal put Arsenal out of the Champions League two seasons ago - was again the Gunners nemesis, scoring a goal in either half at the Mestalla.
Thierry Henry equalised for Arsenal early in the second half but his team could not find an elusive second equaliser and another European campaign ends in disappointment and frustration.
In one of the night's three other final group games, Newcastle failed to find the net at St James Park but their fate was sealed by Inter Milan's victory over Bayer Leverkusen.
The results mean Valencia and Ajax qualify for the quarter-finals from Group B while Inter make it from Group A together with Barcelona who were already through.
They join AC Milan and favourites Real Madrid from Group C and Manchester Utd and Juventus from Group B, who had also already qualified.
The draw for the quarter-finals will be made on Friday.
When the post-mortem begins on Arsenal's failure, the Gunners will be left to reflect on their failure to convert any of their four Group B draws into wins.
Group A: Barcelona (Spa), Inter Milan (Ita)
Group B: Valencia (Spa), Ajax (Ned)
Group C: AC Milan (Ita), Real Madrid (Spa)
Group D: Manchester United (Eng), Juventus (Ita)
Arsenal might still have gone through even though they lost if Roma had beaten Ajax, but that match finished 1-1.
With the season reaching the final leg, Arsenal must now concentrate on consolidating their dwindling lead in the Premiership and retaining the FA Cup.
Gunners boss Arsene Wenger had some good news prior to kick-off when Patrick Vieira and Sol Campbell both passed fitness tests.
And Arsenal made a confident start to the match, attacking with meaning in the opening minutes and retaining possession through midfield as the game found its rhythm.
Henry forced Santiago Canizares into action with a first-minute drive and Robert Pires shot wide shortly afterwards as Arsenal tried to take the sting out of the intimidating Mestalla atmosphere.
KEY MOMENTS IN VALENCIA
29 mins: Placente clears off the line
34 mins: Carew opens the scoring for Valencia
49 mins: Henry equalises
57 mins: Carew heads Valencia back in front
The Gunners came within a whisker of breaking the deadlock when Gilberto Silva's thunderous header struck Diego Placente on the line and rebounded off the crossbar to safety.
But the first time Valencia enjoyed a sustained period of possession they scored.
Pascal Cygan was caught out of position by Pablo Aimar's sliding diagonal pass and Carew had time to pick his spot before slipping the ball past Stuart Taylor from 18 yards.
Arsenal looked stunned after Valencia's goal, but regrouped at half-time and soon restored parity.
Henry latched onto Pires' through ball and charged towards goal before caressing the ball around Canizares from the edge of the area.
But the visitors could not prevent Valencia from scoring again.
Stewart brilliantly saved from Carew and Arsenal seemed certain to clear the danger, but Sylvain Wiltord was caught in possession and seconds later Valencia's giant Norwegian scored his second of the evening.
Valencia then enjoyed a period of dominance in the following minutes, while Arsenal struggled to generate any attacking momentum.
Wenger introduced Francis Jeffers with 15 minutes left and he was through on goal minutes later only to be thwarted by an errant off-side flag.
Valencia played five across midfield in the final minutes, frustrating Arsenal, and might have increased their lead through Aimar and Carew but for some desperate defending.
An serious blow to Canizares' head resulted in five minutes injury time but the clocked ticked down with Arsenal reduced to punting long balls forward.
Valencia: Canizares (Palop 70), Reveillere, Ayala, Carboni,
Albelda, Pellegrino, Rufete, Vicente, Aimar,
Sanchez (Angulo 68), Carew (Marchena 89).
Subs Not Used: Aurelio, Djukic, Mista, De los Santos.
Booked: Carboni, Pellegrino, Aimar.
Arsenal: Taylor, Lauren, Campbell, Cygan, Toure (Kanu 86),
Ljungberg, Silva, Vieira, Pires, Wiltord (Jeffers 76), Henry.
Subs Not Used: Holloway, Stepanovs, van Bronckhorst, Parlour,
Booked: Vieira, Pires.
Referee: Kyros Vassaras (Greece).