Joel Freeland led Great Britain with 15 points, Dan Clark had 14, but the leading scorer was Australia's Patty Mills with 39 points.
GB head coach, Chris Finch commented on the game: "Congratulations to Australia, they advance to the next stage, certainly a place we thought we could get to.
"We were hurt by some old demons, the inability to handle pressure, and we gave up some easy threes.
"We knew they were physical and that they were going to come back stronger after half time. We couldn't do anything to stop their run."
Great Britain quickly jumped out in front, scoring the first six points of the game but Australia pulled it back to 14-11 before Clark found his range, hitting three three-pointers as GB posted a 25-18 lead at the end of the first.
Australia came out stronger in the second, cutting the deficit to 27-25 and forcing GB to call a quick timeout. It worked as Luol Deng responded immediately with a three-pointer and GB took the lead into double figures, ending the half with a 46-36 advantage.
After pushing the lead to 51-36 early in the third, the wheels came off as Australia stunned GB with a 24-4 run. Clark gave GB some hope heading into the final quarter as his three-pointer at the buzzer trimmed the Australian lead to 66-60.
Any hopes of a comeback in the final period were killed off as GB failed to score for almost 5 minutes. Australia pushed the lead to over 30 points, holding on for a win that confirmed their place in the knockout stages and also eliminated China.
"They're a great defensive team and we just didn't respond," said GB guard Nate Reinking. "We had a game plan, were playing at a pace we wanted and they picked up the pressure."
After this defeat, coach Finch said Great Britain will look to end their Olympic campaign on a high note, adding: "We've played well enough to deserve a victory but we have to go out and get it now."
In other action, Team USA squeezed past Lithuania 99-94, while in GB's group, Russia stunned Spain 77-74 and Brazil romped to a 98-59 win over China.
The GB Men's last group game is on Monday afternoon at 4.45pm, when they take on China, while the GB Women will complete their Olympic schedule against Brazil on Sunday night (10.15pm tip-off).
