Rachel Daly was brought down in the box after what appeared to be a push in the back from Nigeria's Rasheedat Ajibade.
The referee immediately pointed to the spot, with England's designated penalty taker Georgia Stanway grabbing the ball and preparing to put it on the spot.
But the Lionesses were left baffled as the referee was called over to the monitor.
The official then announced she'd changed her mind after reviewing the footage, deciding not to give the spot kick and leading England to miss their chance to go ahead in a game that saw Nigeria have the better of the chances.
Fans were fuming over the decision, too.
One wrote: "Not a penalty for England and I would love to know how they came to that decision. Like I said felt it was soft to give the penalty but there's contact in the box on Daly. Baffling."
Another added: "That was a penalty, Daly was pushed."
A third wrote: "That's an absolute joke. It's a stonewall penalty."
But some supporters believed the contact on Daly was minimal, including former Lioness and 2022 European champion Ellen White who believes a penalty would've been 'soft'.
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"Never a penalty, jump to the ground, decision should be a yellow card to England player for simulation," another fan wrote on Twitter.