FIFA's executive committee voted to give the tournament to Russia ahead of England, Spain/Portugal and Holland/Belgium.
Four years later, the showpiece event will go to Qatar for the first time.
The defeat comes despite an impressive presentation by England that was described by FIFA president Sepp Blatter as "excellent and remarkable".
England looked to have suffered from a backlash against corruption investigations into FIFA members by BBC Panorama and the Sunday Times over the last two months. These investigations were criticised both by Russian prime minister Vladimir Putin and Spain/Portugal bid president Angel Villar Llona in his presentation to fellow FIFA members on Thursday.
Premier League chief executive Richard Scudamore said: "It is absolutely disappointing. It is an emotional moment for everyone.
"Fair play to Russia, they are the winners but it is a huge disappointment.
"I thought the presentation was a good one. It transcended all our expectations. Everyone was absolutely on message, it was fantastic.
"I thought it was a great technical bid and the team have done a fantastic job.

"I feel very disappointed for the fans who got right behind it and the clubs who put in so much time, effort and energy. We could not have asked any more of David Cameron, David Beckham and the whole team."
The "Three Lions" all sparkled but were all outshone by 27-year-old Eddie Afekafe, who works on Manchester City's community programmes.
Afekafe had opened the presentation in a powerful performance by telling the FIFA members how football had "changed my life".
He said: "I grew up in one of the roughest parts of Manchester, most of the guys I grew up with were in gangs - some still are, some are in prison.
"What they didn't get but I got was an opportunity - and that was through football."