Dravid's men, defending a modest total of 212 under the Old Trafford floodlights, were on course to level the seven-match series at 2-2 after reducing England to 114 for seven in the 24th over.
But instead India ended up losing by three wickets to go 3-1 down.
They were rendered powerless by an unbroken record England eighth wicket stand of 99 between the 22-year-old Ravi Bopara, 43 not out, and the 21-year-old Stuart Broad, 45 not out, both of whom were appearing in only their 13th one-day international.
In the end England won with two overs to spare, with man-of-the-match Broad posting his highest score at this level after taking career-best figures of four for 51.
Defeat was particularly hard on Ajit Agarkar. Recalled in place of fast bowler Munaf Patel after England's 42 run win at Edgbaston on Monday, the experienced seamer dismissed four of the top six on his way to figures of four for 60.
By contrast, his previous two matches this series had yielded combined figures of none for 132 off 19 overs.
"It's tough, but I think when we reach Headingley we'll be pretty keen," Dravid told reporters after Thursday's match.
"We'll know in the back of our minds that we could have won that game. The series could so easily have been different," added Dravid, whose team must avoid defeat at Headingley to keep the series alive.
Despite Agarkar's efforts, England scored quickly and, even when seven down, were well ahead of the required rate.
I knew that if they batted 50 overs they would probably get there," said Dravid. "We knew we only needed that one wicket, but credit to them because they played really well."
What Dravid didn't say was India might well have got the breakthrough they were looking for had not teenage leg-spinner Piyush Chawla seen what looked like a convincing lbw appeal against Broad, then on 25, rejected by English umpire Ian Gould.
Once more India's fielding let them down, even Dravid diving over the ball at mid-off, and their relative sloth between the wickets was highlighted when Bopara and Broad completed an all-run four.
"Our fielding is an area that can hurt us, particularly in these tight, low-scoring games," Dravid admitted.
"If you've got six or seven guys in the ring trying to save singles but the opposition is still able to take them, it's tough."
India's leading batsmen again found runs hard to come by against England's seamers with James Anderson (three for 38) and the fit-again Andrew Flintoff (one for 31) especially economical on their Lancashire home ground.
It needed a fourth-wicket stand of 71 between Sachin Tendulkar (55) and Yuvraj Singh, who himself scored 71, to revive India's innings from the depths of 32 for three.
"I think we were about 25 runs light," Dravid, caught behind off Flintoff for one, said.
During England's reply the fixture became the most fractious contest between the two sides since India's victory in last month's 'jellybean' Test match at Trent Bridge.
Gould had a word with Dravid as tempers started to flare but the India captain said it had all been part of the normal flow of the game.
"It was nothing serious. We have communication between the umpires and the captain all the time and there was nothing more to it than that."
Dravid added that India were waiting on the fitness of left-arm pace bowler Zaheer Khan, who took one for 45 in nine overs despite twisting an ankle.
"We've got a couple of days but hopefully he'll be all right."