Rimando was moments away from being the hero for RSL, having made two huge saves in the final minutes including denying Houston's Brad Davis a penalty kick in the 75th minute.
But in the dying moments of stoppage time, Rimando charged off his line after a ball in the air, and took out Houston's Mac Kandji in the box. Referee Ismail Elfath made an easy call for another penalty kick, and the Dynamo's Colin Clark fired it right down the middle while Rimando dove to his left.
"We gave three points away," Rimando said.
Assistant coaches raged at the officials after the final whistle, apparently believing the game should have been over by the time the penalty was called, while head coach Jason Kreis sat in stunned silence on the bench long enough for the stadium to empty.
"Obviously, there's a misplay that ends up with the referee having to make a decision," Kreis later told CW30, "and another one that we don't like."
The loss snapped a three-game shutout and unbeaten streak for RSL, which faces an even tougher task now in trying to cement a favorable playoff seed. Team officials believe they need 10 points from their remaining games just five of them, now, including three on the road to avoid a wild-card game.
Both teams had plenty of chances in a wild final 15 minutes.
After Rimando stopped Davis on the penalty, Dynamo keeper Tally Hall brilliantly saved a header from RSL's Nat Borchers off a Javier Morales corner kick.
Minutes later, Rimando made another exhilarating save by smothering a shot by Houston's Will Bruin, who'd beaten Ned Grabavoy to a cross at the far post.
That wasn't the worst of it for Grabavoy, either.
In the 89th minute, the veteran midfielder found himself alone against Hall after the ball popped out of a pinball machine in the box and rolled right to his feet. But Grabavoy could not beat Hall from close range, denying RSL the chance for a historic victory.
Instead, it fell to 0-8-1 in Houston, and 0-18-3 all-time in Texas.
The team has scored just three goals in its last six Major League Soccer games, leaving it 14-11-4 for 46 points tied for third in the league, but having played two more games than every team even with or ahead of it.
Both teams were depleted by international duty, injuries and suspension.
Forward Alvaro Saborio and midfielders Kyle Beckerman and Will Johnson were away on international duty for RSL, while defender Chris Wingert was serving a yellow-card suspension.
In his place, Chris Schuler saw the field for the first time in four months after recovering from a foot injury, and played well though it was his foul that led to the penalty that Rimando stopped.
Midfielders Boniek Garcia and Je-Vaughn Watson were away on international duty for the Dynamo, along with defenders Jermaine Taylor and Andre Hainault. Forward Brian Ching and midfielder Nathan Sturgis turned up ill, too, and did not play.
The Dynamo improved to 12-7-9 for 45 points in the MLS Eastern Conference, and extended their home unbeaten streak to 22 games.
R IN SHORT • A stoppage-time penalty kick sinks RSL in 1-0 loss at Houston.
KEY STAT • RSL is 0-18-3 all-time, in all competitions in Texas.
KEY MOMENT • Goalkeeper Nick Rimando takes out Houston's Mac Kandji in the dying moments of stoppage time, leading to the game-winning penalty kick.