Sachin Tendulkar-led side will have to pack their bags and return home as Bangalore and Highveld Lions have a better net run rate with one match still to go.
Mumbai's prospect has also been marred by South Australia Redbacks, which has already booked their place in the last four stage from Group B with three out of three wins.
Although Mumbai have fours points, they ended their campaign with a net run rate of +0.22, while Bangalore (+0.85) and Lions (+0.72) are in a better position with still a game to go.
Incidentally, the match between Bangalore and Lions have turned out to be a decider as whoever wins the encounter will progress to the semifinals along with Redbacks.
In today's Indian Premier League derby, Rahul Dravid's unbeaten 58-ball 71 and Virat Kohli's 24-ball 47 went in vain, as chasing a competitive 166, Bangalore managed 163 for five in their alloted 20 overs, thereby falling short by two runs.
Needing 13 runs off last over, Kohli struck two fours off Zaheer Khan but in the end it was not enough to guide Bangalore home as he was caught in the final delivery by Ambati Rayudu.
Earlier, Bangalore produced a disciplined bowling performance upfront before Saurabh Tiwary and Dwyane Bravo stitched a quickfire 64-run sixth wicket stand to take Mumbai past the 150-mark.
In deep trouble, Tiwary (38 not out) and Bravo (29 off 23) came to Mumbai's rescue with the 64-run stand after the Sachin Tendulkar-led side were down 84 for five at one stage.
The duo's pyrotechnics helped Mumbai piled up 65 runs off the last five overs.
Tiwary hit three fours and a six in his 30-ball unbeaten stay while Bravo decorated his innings with three boundaries and two sixes.
For Mumbai opener Shikhar Dhawan top-scored with 41 off 37 balls which was studded with two fours and as many sixes.
Dale Steyn was the pick of the bowlers for Bangalore with figures of three for 26.
Chasing the competitive total, Bangalore started on a positive note with Dravid and Kallis picking up 40 runs of the first five overs.
Dravid was at his elegant best, picking up boundaries at ease with classical cricketing strokes while Kallis (15) complemented him well before debutant pacer Abu Nechim Ahmed caught the South African plumb in front of the wicket.
Bravo gave Mumbai more reasons to cheer in the next over when he had Robin Uthappa caught by Dhawan at deep square leg but not before the right-hander was dropped by JP Duminy in the previous delivery.
The two quick wickets stemmed the run flow and resulted in the downfall of another batsman.