Goals from Emma Buckley and Roisin Howard brought Cahir back into the game as Milltown were clinging on at Parnell Park.
Cahir led by a point at the break 0-7 to 0-6 but Milltown hit a quick goal and point at the start of the second half and pushed ahead.
Cahir stormed back late on but the Lake county representatives held on to win 2-14 to 2-12.
Afterwards Cahir manager Karl McCarthy told Tipp FM Sport he was bitterly disappointed at the result but proud of his team.
