Stuart McCall's side had their fair share of possession and half-chances in the third qualifying round clash but lasted just 13 minutes of their debut in the competition before conceding.
The manner of the goal would have been deeply frustrating for McCall as an inswinging free-kick from Lazaros Christodoulopoulos found its way inside Darren Randolph's far post as the home side failed to attack the delivery. Substitute Charis Mavrias broke away in the 76th minute to give Motherwell a mountain to climb in Athens to reach the play-offs.
McCall picked an attacking team with strikers Michael Higdon and Henrik Ojamaa both starting along with wingers Chris Humphrey and Jamie Murphy.
The 9,035 crowd were lifted by positive runs from Motherwell's wide players and Humphrey fired inches over from 25 yards following a short corner. The dreaded away goal soon came though and it was bitterly reminiscent of the strike that killed off Motherwell's UEFA Cup tie against Nancy four years ago.
Shaun Hutchinson was penalised for a push on Ibrahim Sissoko near the left touchline. Christodoulopoulos swung the free-kick in from about 40 yards and Jean-Alain Boumsong made an unchecked run across the box. The former Rangers and Newcastle defender did not appear to get a touch as the ball curled inside the far post.
The goal slightly deflated a vibrant atmosphere although Motherwell produced a decent initial response, keeping possession for long spells against a Greek side now content to sit in. Humphrey got on the end of a back-post cross but could not turn it on target and Keith Lasley fired over with his left foot after Murphy threaded the ball into his path.
Ojamaa had a sight of goal but his hesitation allowed Jose Manuel Velazquez to take the sting out of his shot. Higdon then got a header on target from Murphy's cross but it was straight at Orestis Karnezis.
Christodoulopoulos curled just wide from 25 yards 30 seconds after the restart but at the other end Karnezis was soon tested by Tom Hateley's 30-yard free-kick, taking no chances on the wet surface by pushing the ball to safety. Only a brilliant sliding block from Boumsong stopped Nicky Law converting after Ojamaa had cut open the away defence.
Panathinaikos added the killer second when Ojamaa lost the ball on the edge of the Greek box after a Motherwell free-kick and the visitors cleared the ball to Sissoko, who played a perfect through ball for right winger Mavrias and he fired the ball through Randolph's legs.