England had gone to Montenegro needing just a point to qualify and were cruising when they went 2-0 up after just over half an hour thanks to goals from Ashley Young and Darren Bent.
The hosts pulled one back on the stroke of halftime through Elsad Zverotic before England striker Wayne Rooney was shown a straight red card after 74 minutes and Montenegro made the most of the advantage with a last-minute goal from Andrija Delibasic.
The draw secured second spot in the group for Montenegro and a place in the playoffs, triggering wild celebrations on the Podgorica pitch.
For England, festivities were tempered somewhat by Rooney's moment of madness, when he kicked out at Miodrag Dzudovic, which will earn the country's most dangerous attacking player a minimum one-match ban at the start of next year's finals.
"It surprised me because just in front of me he kicked the opponent, I think the red card is OK," Capello told Sky Sports. "For the next game he will be suspended so we will try to find new solutions."
England, who failed to qualify for the 2008 edition of the European Championship, completed their campaign unbeaten with 18 points from eight games.
Montenegro have 12, having played one game fewer, and cannot be caught by third-placed Switzerland whose hopes ended with a 2-0 defeat in Wales.
Referee Wolfgang Stark (left) sends off England's Wayne Rooney (right) during their Euro 2012 Group G qualifying match against Montenegro
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