Leicester boss Craig Shakespeare questioned referee Jonas Eriksson after Antoine Griezmann's controversial penalty gave Atletico Madrid a Champions League advantage.
The striker's dubious spot-kick gave Atletico a slender 1-0 quarter-final first-leg win ahead of next week's second leg at the King Power Stadium.
The France forward tumbled under Marc Albrighton's first-half challenge and referee Eriksson gave a penalty despite the tackle occurring outside the area.
It settled a game and Shakespeare insisted the referee got it wrong at the Vicente Calderon Stadium.
He said: "It's a real disappointment. It's a key moment in the game. It's a really disappointing decision by the referee. He has to get that one right. You can't guess on those ones. It's a free-kick, it's a definite free-kick, but it's outside the box.
"The referee has a hard job. We know that. But it's the key decisions that you want correct."
Robert Huth received his third booking of the competition and will miss the second leg leaving Leicester with a centre-back problem.
Captain Wes Morgan has missed the last five games with a back injury leaving Yohan Benalouane the only recognised centre back currently available.
And Shakespeare joked he will do everything he can to have Morgan available.
"I've just told him in there that when we get back to the hotel, he's getting his kit on, going to the gym and making sure he does a session," he said.
"We were always on the tightrope with people like Robert because he's a very competitive centre-half. As you say, it was a very competitive game."
But Shakespeare believes they can still reach the semi-finals when they welcome Atletico for the second leg on Tuesday.
He said: "I think 1-0, we'd have probably taken that before the game. We've come here to try and get the away goal. You saw what a top team Madrid are. We've come away, we have a good home record at the King Power, and the tie's still alive.
"I've seen enough throughout the squad, through working with them. We know what we're about at the King Power. We know what we've got to do."
Koke also hit the post for Atletico, who have been beaten finalists in two of the last three years, and Diego Simeone's team dominated but failed to kill the Foxes off.
But they will travel to Leicester with a slender lead although Simeone admitted they did not have enough edge on Wednesday.
He said: "We lacked the clinical finish. We had most of the possession but I think Leicester were gambling on getting us on the counter attack.
"I think they are betting everything on the second leg. Griezmann is a fantastic player. He plays in midfield and plays like a striker, he's an amazing talent.
"It was a hard-fought match. It's a good win for us but the second leg will be difficult. It's all still to play for."
Albrighton admitted his challenge had been clumsy but echoed Shakespeare's sentiments regarding the location of the foul.
He said: "I asked the ref about the decision after the game and he said the foul was on the line. That's his verdict on it but TV replays have shown it was outside.
"It was a clumsy challenge but my first thought was to not let him in the box. The final decision lies with the referee and its cost us. We can't afford to dwell on it and we have to put it out of our minds as soon as possible.
"We've just got to move on although it's taken the gloss off it a little bit."