Emily Overholt out-touched Caitlin Leverenz of the U.S. at the wall to finish first in the 400-metre individual medley and to kick off the third night of finals, but the Canadian was disqualified for a "non-simultaneous" wall touch during the breaststroke leg of the race.
Officials ruled both her hands did not contact the wall at the same time.
Swimming Canada protested to the meet referee and then the jury of appeal, but Overholt's disqualification was upheld.
The youngest swimmer on the Canadian team at 17, Overholt's time of four minutes 35.33 seconds would have been the fourth-fastest in the world this year, as well as a national and Pan Am record.
"It's unfortunate, but I still did the swim, so I still know that I have it in me," said the West Vancouver, B.C. swimmer. "It's something to learn from."
Canada picked up three silver and three bronze Thursday for a total of 19 with two days of racing remaining. The United States improved to 16 and Brazil 14 and lead the gold-medal race with six apiece to Canada's five.
The night began on the odd note of a belated 800-metre men's freestyle relay medal presentation, which had been postponed from the previous evening because the United States appealed a disqualification.
The Americans were successful in their appeal, however, and the reinstatement of their silver bumped Canada to bronze.
Overholt's swim ignited the pro-Canadian crowd, but their celebration was short-lived and the atmosphere in the building remained relatively flat compared to a raucous first two days.
Thiago Pereira, Brazil's most decorated Pan Am swimmer, was stripped of a first-place finish in the men's I.M. for a similar violation to Overholt's.
Canada's Sydney Pickrem, whose hometown is now Oldsmar, Fla., upgraded from bronze to silver in the women's I.M. because of her teammate's disqualification.
Luke Reilly of Richmond, B.C., also moved up a step on the podium to silver after Brazil's unsuccessful appeal for Pereira.
Noemie Thomas of Richmond, B.C., and Katerine Savard of Pont-Rouge, Que., took silver and bronze respectively in the women's 100-metre butterfly. Santo Condorelli of Kenora, Ont., earned bronze in the men's 100-butterfly.
Overholt swam the lead leg of the women's 800-metre freestyle relay without knowing the result of the appeal on her behalf. She was informed of the decision after the relay. Overholt gave Canada the lead, but her team was overtaken by the United States and Brazil.
Overholt, Savard, Toronto's Brittany McLean and Alyson Ackman of Pointe-Claire, Que., settled for bronze.
Swimming Canada high-performance director John Atkinson appreciated Overholt's resilience in swimming a strong relay leg despite the turmoil around her individual race.
"That shows the character of the young lady, that she had that happen, dust yourself down and get back up for the relay, lead the relay off in the manner that she did," he said.
Meanwhile, a belated swim medal could be on its way to Canada. Atkinson said he was aware of reports that a Peruvian swimmer tested positive for the steroid Stanozolol.
The Toronto Star said Mauricio Fiol told a news conference he did not take the steroid and was getting advice from the Peruvian Olympic Committee.
The Peruvian took the silver medal in the men's 200-metre butterfly, so Canadian Zack Chertat's bronze would be upgraded and teammate Alec Page would move from fourth to bronze if Fiol is stripped of his medal.
Page called his fourth-place finish "bittersweet" but said he wasn't going to get ahead of himself.
"I would be happy, but I'm going to hold back for now, just because nothing is official yet," Page said at the pool Thursday night.