It leaves their top eight hopes on a knife edge, and the result was soured further by a possible serious injury to Shaun Johnson, who limped off the field midway through the second half.
The Warriors tried to play on emotion, but the Panther brought cold hearted precision, with Nathan Cleary the standout with three superb tries and brilliant organisation.
Vatuvei's emotional farewell, after 14 years and 226 games of first grade service, added to the poignancy of the occasion before kickoff.
A tearful Vatuvei, wearing his number five jersey for the last time, walked on to the field through a guard of honour, formed by both teams.
The legendary winger, who was accompanied by his children, was also farewelled by a traditional Tongan dance.
And if there was any doubt about his standing amongst the Warriors faithful, it was epitomised by more than 13,000 fans turning out to the renamed Manu Vatuvei stadium on a freezing night in Auckland, and after a week capped by a Polar blast.
There was also revenge in the air for the home side, after the harrowing 36-28 defeat at Pepper Stadium in round 10 in May, when the Warriors gave up a 28-6 halftime lead.
But those twin motivating factors weren't enough, as the Warriors were out played, out passioned and out-thought.
The Warriors lacked patience on attack, often releasing passes that didn't need to be thrown. They were also guilty of hesitancy on defence, allowing Cleary far too much time and space.
On Vatuvei's big night, his closest friend at the Warriors gave the home team a perfect start. Simon Mannering crossed in the second minute, after Johnson scythed through the Panthers line.
Penrith responded soon afterwards. After a period of siege near the Warriors line, a Cleary grubber caught Solomone Kata and Ken Maumalo on their heels and Kiwi teenager Corey Harawira-Naera was first to the ball in the melee.
Kata was quick to make up for his lapse, burrowing over from five metres to restore the Warriors line. It has become a trademark of the Tongan over the last two years, as he has become one of the hardest players to stop from close range in the NRL.
The Warriors trailed at halftime - after Cleary's snipe from 10 metres - but regained the ascendancy through Kata's second try, swiftly followed by Bodene Thompson's touchdown after smart work by Blake Ayshford.
The home side looked on track for the desperately wanted - and much needed win - but a 67th minute Cleary try put the Panthers into a lead they never relinquished.
