Donegal were beaten 2-11 to 1-4 by London in the Christy Ring Cup relegation play-off in Crossmaglen.
This result means that they will play in the Nicky Rackard Cup next season.
The sides were level at the break, 2-5 to 1-8 with Ciaran Matthewson getting the Donegal goal with a penalty.
But London were the better team in the second half.
Donegal were reduced to 14 players on 51 minutes after Mark Callaghan got a second yellow card.
London finished strongly to win by seven points.