Rahman lost the Oscar for best original score to composer duo Trent Rezmor and Atticus Ross who won it for "The Social Network"; the best original song award went to Randy Newman, who won it for "We Belong Together" in "Toy Story 3".
The composer, popularly known as the Mozart of Madras, also performed at the mega event, being telecast live across the world.
India-born film editor Tariq Anwar, nominated for the Oscar in the best editing category for "The King's Speech", couldn't get the coveted statuette either. He lost out to Angus Wall and Kirk Baxter who won it for "The Social Network".
"The King's Speech" walked away will the top honours - best film, best actor for Colin Firth, best director for Tom Hooper and best screenwriter David Seidler.
In 2009, Rahman brought home two golden statuettes for best score and best song in "Slumdog Millionaire". He was the first Indian to bag two Oscars.
Back home in India, where the awards ceremony was telecast early Monday morning, many woke up, hoping to see Rahman get at least one Oscar.
"At least he should have got one. This is very disappointing, " said Sumit Gupta, a New Delhi-based engineer.