Milan romped to victory in the race, winning 47 IOC votes to Stockholm's 34, in a one-sided result that left the Swedes almost as confused as they were crushed.
"I am very sad for the 34 people who voted for the Games of the future," Stockholm2026 chief Richard Brisius told reporters in Lausanne.
"Our proposal for a transformative Games was a good one, but the IOC did not choose it.. Of course we are very disappointed. We had a bid that included all the reforms for a sustainable Games. But it did not happen."
When the final hammer blow came with the opening of IOC President Thomas Bach's envelope, it was hardly unexpected.
Swedish Prime Minister Stefan Lofven had left Lausanne before the announcement, having earlier addressed the IOC membership.
There was a sense the Swedes had known their chances were becoming increasingly slim after Gunilla Lindberg challenged her fellow IOC members in the morning.
"As IOC members, you must choose a city that embodies the principles of Olympic Agenda 2020 and The New Norm," she told them. "Not just on paper and, frankly, not just in the bid, but in every part of culture and way of life.
"This is your chance to prove that The New Norm is not just talk," she added, prompting sharp intakes of breath from seasoned Olympic watchers.
The IOC's reforms in recent years under the 'Agenda 2020' banner and 'The New Norm' programme -- "an ambitious set of 118 reforms that reimagines how the Games are delivered" -- aim to make it cheaper and easier to stage the Olympics.
DANCING QUEEN
Not even a rendition of Abba's 'Dancing Queen' by Stockholm Mayor Anna Konig Jerlmyr could put the bid back on track as the hours to the vote ticked down.
In the minutes between the secret ballot and Bach revealing the winner, Swedish IOC member Stefan Holm was seen in despair.
The Olympic high jump gold medallist had taken himself outside the SwissTech Convention Centre and stood slumped over a metal railing.
His head in his hands, he stayed there, motionless apart from a shaking head, for more than 10 minutes, processing the soon-to-be-announced defeat.
Lindberg failed to address the media after the announcement, in a rare move for such an experienced IOC member, while Konig Jerlmyr peddled the party line.
"We are very proud of our work," she said. "Of course we are disappointed... we thought we had a strong bid, but of course we congratulate Milano-Cortina."
Sweden, a winter sports powerhouse, have now bid eight times for a Winter Olympics and never won.
"It is too early to speculate about another bid," Konig Jerlmyr said. "We have to evaluate the whole process and then see. We thought we had a strong bid, but at the end they did not choose us."
The IOC is due to discuss radical reforms to the bid process later this week, a move welcomed by the Swedes.
"It is probably a good thing that the IOC will make changes to the bidding process," Brisius said. "Because obviously it does not seem to suit us. That’s my conclusion."
(Reporting by Ossian Shine; Editing by Ken Ferris)
