Sarina Wiegman's valiant Lionesses could not find the all important goal to send the match to extra-time after Olga Carmona's first half strike.
It was heartache for England, but the European champions can be proud of their run Down Under.
Wiegman chose to not recall Lauren James to the starting XI, sticking with the team who beat Australia in the semi-final.
The Lionesses started well with Lauren Hemp rattling the crossbar in the 16th minute.
It was Spain who would go on to take the lead, however, with Carmona firing beyond Earps.
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Spain continued to threaten and Manchester United goalkeeper Earps continued to keep the Lionesses in it at the break.
Wiegman made some bold decisions at half-time too, deciding to take off Alessia Russo and Rachel Daly for James and Chloe Kelly.
It was Spain who continued to create the most chances, however, and had the opportunity to put the game out of sight.
VAR intervened to award them a penalty following Keira Walsh's handball.
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However, Earps brilliantly saved the spot-kick to keep England in it.
Earps continued to make a number of excellent saves but at the other end of the pitch they could not find a goal that would take it to extra-time.