Alloa's new boss Allan Maitland was disappointed that his side had lost this hard-fought match after having so much of the play.
From the start Alloa went on the attack, and as early as five minutes a James Stevenson corner was punched clear from the head of Fraser Forrest by the Forfar keeper.
Forfar had a golden opportunity in the 12th minute when Barry Sellars out-jumped the Alloa defence to head a Steven Bonar cross towards goal, but an excellent save by James Evans kept the score 0-0.
Robert Sloan came close in the 17th minute for the Wasps when his fiercely-hit 30 yard shot went past the post with the Forfar keeper well beaten.
Alloa dominated much of the play in the early part of the second half, and in the 58th miute Ross Hamilton, who had tormented the Forfar defence, crossed from the right and Gary McGlynn's shot was brilliantly saved by Francois Dubourdeau in the Forfar goal.
Alloa continued to press the Forfar defence and had chances by Iain Nicolson and Jose Quitongo cleared by a stretched Forfar defence. Quitongo had a 77th minute header cleared from the line by Chic Connolly.
Alloa were hit by a sucker punch in the 87th minute when Connolly, who had come upfield from his defensive position, was on hand to fire an unstoppable shot from 25 yards to give Forfar an undeserved lead.