Lianne Sanderson's 68th-minute goal lifted England to a 1-0 win in Wednesday's final, marking the first time the Canadian goal had been breached in four games at the tournament.
Sanderson scored from 15 yards after Jordan Nobbs' through ball.
"I think they probably had three shots on goal the whole game," Canadian coach John Herdman said. "They broke away. We were on attack in their half and two passes later they're behind our two centre backs. They capitalized.
"So it was just disappointing because we'd talked and worked tactically on trying to make sure they didn't release someone on that phase of the game and it happened. I guess our two young centre backs will learn from it."
The Canadian women also lost some of their structure in the last 10 minutes while they chased a tying goal, Herdman said.
"I think that's a massive learning for us in the next three months, just to start tidying up some of those tournament processes that we've been putting in place."
Canada almost tied it in stoppage time but England goalie Siobhan Chamberlain stopped Allysha Chapman's shot from 20 yards out.
"She made a cracking save," said Herdman. "But I think throughout the game we were the better team.
"England has beaten us here at the Cyprus Cup twice before when we've been developing towards the World Cup. And I can honestly say look, they were the better team in those games. But tonight Canada was the better team. So I mean as a group, we don't feel beaten although the result reflects that."
Captain Christine Sinclair echoed that view.
"I think we made a lot of progress in this tournament, showed a lot of growth" she said. "I thought we outplayed England in the final.
"It was a tough one to lose."
Forward Melissa Tancredi left in the first half with a possible broken nose, making contact with an English player after slipping on the wet turf.
Canada opened the tournament with wins over Scotland, South Korea and Italy.
The loss ended Canada's eight-game unbeaten streak, nine if you include a close-door scrimmage with Australia.
Canada was bidding for its fourth title at the Cyprus Cup. The championship was the third for England, which finished the tournament with three wins and a tie.
Both teams are gearing up for the June 6 start of the Women's World Cup in Canada.