Natasha Flint’s well-taken effort in the second half cancelled out a fine opening goal from Jade Le Guilly, as the contest at Stade Michel-Bendichou ended 1-1 after 90 minutes.
But the French side would win the resulting shootout 2-1 after Missy Bo Kearns, Gemma Bonner, Jenna Clark and Yana Daniels were unsuccessful with their attempts from 12 yards out.
The two teams were separated in an even start to the contest in Colomiers by a moment of brilliance from Le Guilly.
PSG, who had earlier clipped the post through Ana Vitoria, took the lead in the 21st minute when Le Guilly curled in a strike from around 25 yards out, leaving Rachael Laws with no chance.
They had the ball in the net again two minutes later but Amalie Vangsgaard was ruled to have finished from an offside position, as Laws then saved well from Sandy Baltimore.
Liverpool came close to levelling shortly before half-time. Flint was left frustrated by the woodwork after Ceri Holland pinched possession with a high-press in PSG’s defensive third and then squared to her teammate inside the box.
The Reds returned from the break on the front foot and with great intensity.
Daniels forced a save from Katarzyna Kiedrzynek with her first touch since being introduced, while Miri Taylor tested the reach of the PSG goalkeeper with a hit from distance.
The deserved leveller arrived in minute 56. After going close with a controlled volley moments before, Flint then received a throw-in from Emma Koivisto and evaded two defenders with a deft body feint. It gave the forward the necessary space inside the box to drill a low finish beyond Kiedrzynek and level proceedings.
Matt Beard’s side could have gone into the lead shortly after, with substitute Kearns striking the post with a speculative effort and then having a close-range finish smothered. Taylor Hinds also had a header from a corner kept out by Kiedrzynek.
That pressure was not reflected in the scoreline, however, so the contest would be decided by spot-kicks, where PSG emerged victorious.
NEXT UP
Liverpool will now meet Atletico Madrid in the tournament’s third-place play-off on Thursday in a 5pm BST kick-off.
They begin their 2023-24 Barclays Women’s Super League campaign on October 1 away at Arsenal.
