A last-minute equaliser from Qatar's Mohammed Muntari meant Iceland warmed up for their World Cup finals debut in Russia next year winless after playing two friendly matches in Doha.
The 1-1 draw on Tuesday followed their 2-1 defeat against the Czech Republic in Qatar last week.
Muntari slammed home from close range to force a deserved draw for the World Cup 2022 hosts following a laboured performance by Iceland.
And it could have been even worse for the Europeans as Qatar's Ahmed Mohamed even had a chance to win the game very late on.
Iceland's coach Heimir Hallgrimsson though insisted he was not too upset by the scoreline, but troubled by the performances of his fringe players.
"It was disappointing to concede a goal in the dying minutes but probably it was deserved, 1-1 was probably the right result," he said.
"It wasn't all about the results but we would like to have seen more players stepping up and showing they will be the ones who play in Russia."
Iceland looked set for a routine victory after Vidar Orn Kjartansson scored the game's opening goal in the 26th minute after being put through by skipper Gylfi Sigurdsson, who pounced on a mistake by the Qatari defence.
But they were unable to see off a youthful Qatari side -- whose average age was just 24 -- and who failed to qualify for next year's finals.
Hallgrimsson fielded a makeshift side, making several changes throughout the game though Everton's Sigurdsson played the full 90 minutes.
Qatar enjoyed lots of possession though, in truth, rarely threatened the Iceland goal.
When they did it was usually through captain Hasan al-Haydos, whose 11th-minute 20-yard shot, superbly saved by Ogmundur Kristinsson, was the closest they came to scoring before the dramatic end.
Qatar's Abdelkarim Hassan also forced a fine save late on from a free-kick.
Coach Felix Sanchez, who took over the Qatar team at the end of a tumultuous World Cup campaign, said he could see signs of improvement in his young team.
"We played against a team that was very difficult to beat," he said.
"I think we deserved at least the draw, if we scored the chances we had maybe we deserved the victory."
Iceland, with a population of just 330,000, are the smallest nation to have ever qualified for a World Cup.
Whatever happens in Russia, they are set to be one of the stories of the tournament having qualified in style from a group containing Croatia, Ukraine and Turkey.
That qualification cemented their growing reputation, coming after Iceland beat England at last year's Euros to reach the last eight.
Hallgrimsson said it was likely they would play "two or three" more matches before the World Cup.
Just 2,758 people watched the game in Doha's Abdullah bin Khalifa Stadium, though that included former Barcelona star Xavi Hernandez, who now plays for Qatar's Al Sadd.