The Meteors, who played 1:1 against Cameroon in their first group game were hoping to get a good results over Egypt who beat other Group A member Mali to top the group.
But the Black Meteors, led by coach Ibrahim Tanko threw away the lead twice to lose 3-2 to the Olympic Pharaohs at the Cairo International Stadium.
With just a point out of two games, Ghana find itself in a difficult position to make the semi-finals of the competition and possibly pick one of the available slots for the tournament that serves as a qualifier for the Tokyo 2020 games in Japan.
Yaw Yeboah, captain for Ghana put the team ahead from close range but Pharoahs striker Moustafa equalised in the 17th-minute.
Samuel Obeng put Ghana ahead again in the early parts of the second half Ahmed Mohamed's fine after pouncing on a weak back pass from Egyptian centre-back Mohamed Abdelsalam to make it 2:1.
Egypt improved their game by piling pressure on Ghana in search of an equalizer but to no avail until the 82nd minute, when Ramadan Ahmed Sobhi drew level for the home side.
The Pharoahs kept on the momentum, which yielded results as the host continued to pile pressure in the 88th minute, when Rayan Yasser out-jumped the Ghana defence to head home the match winner to end the game 3:2 in favour of the host.
Egypt with two wins in Group A, tops with six points, followed by Cameroon on four points after beating Mali, leaving Ghana and Mali on third and fourth on the log respectively.
Ghana takes on Mali in the final group game on Thursday in a bid to secure qualification for the tournament they featured in since 2004, if Egypt is able to beat Cameroon convincingly.
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