Goals from Fredrik Semb Berge, Jo Inge Berget and Magnus Eikrem were enough to win it for Norway and, while Craig Dawson pulled one back, England can no longer go through from Group A.
It was a bitter disappointment for the Three Lions who had high expectations of bouncing back from an opening 1-0 defeat to Italy against a side they'd beaten twice in qualification.
Bolstered by the return of Tom Ince and Danny Rose from suspension and the presence of Wilfried Zaha, England actually began the match brightly and dominated possession early on.
Rose had a chance to put his side ahead when he got his head to Jordan Henderson's free-kick but by that stage England had already been warned of Norway's threat and were soon punished.
Best of the match:
Goal of the match: Marcus Pedersen cut the ball back for Magnus Eikrem to thunder past Jack Butland and kill the contest.
Man of the match: Pedersen was a willing runner throughout and his hard work gave Norway the thrust from which to get a foothold in the game.
Talking point: What next for English football? Another tournament exit will lead to further question marks regarding the national team set-up through all age groups.
Jack Butland failed to get a clean punch away from a corner and when the ball eventually came back into the box the England defence failed to clear allowing Semb Berge to fire home on the turn.
The goal did little to change the pattern of the game but Norway's confidence was growing and Marcus Pedersen could have doubled the lead only to skew wide after eluding Steven Caulker.
But that second goal came soon enough when Caulker was again caught out by Havard Nielsen's lofted pass and Berget connected sweetly with the bouncing ball to blast past Butland.
Connor Wickham replaced Jason Lowe at the break but England were three down shortly afterwards when Eikrem brilliantly turned in Pedersen's fierce cut-back from the right touchline.
Just as a humiliating defeat looked inevitable, Dawson was pulled back in the box by Semb Berge and the defender slotted home from the spot to give his team some hope of a comeback.
But while England huffed and puffed in the latter stages there was no heroic recovery and questions will now inevitably continue regarding the state of England coaching at youth levels.