The close 17-14 defeat in the play-off means the Bok Women Sevens will have to revert to the regional route to qualify for the new second-tier competition next season, with China, Brazil, Argentina and Spain progressing from the LA tournament.
South Africa still held a 14-10 lead with a minute left on the clock, but with a one-player advantage after Alicia Willemse was red carded for a dangerous tackle, Kenya scored to seal a third win over their African foes this season.
The match started well for the Bok Women. A spilled ball by Kenya two minutes in resulted in Nadine Roos scoring a runaway try and her conversion handed them a 7-0 lead.
Kenya responded well though and scored from a turnover for their first points of the match, courtesy of a try by Freshia Oduor. The conversion was wide and that kept the SA side in the lead, but that changed when the East Africans went ahead on the scoreboard just before the break though when Sharon Auma scored for a 10-7 lead.
A yellow card to Kenya after a high tackle to Simamkele Namba handed SA a chance to take the lead back, but a poor pass to Maria Tshiremba cancelled the advantage of having an extra player on attack.
The second half effort to use the extra player worked better with Shiniqwa Lamprecht being put in space with some crisp passing and running hard for their second try and the lead. Roos converted for a 14-10 lead.
Willemse was red carded with five minutes left that left the South African player motionless on the pitch, and with two minutes to play, Kenya had the numbers and the aces, as Oduor stepped inside her defender to score in the final minute of play.
Leigh Fortuin scored the match-winner against Argentina.
The Bok Women had one more attacking opportunity from the restart, but a forward pass ruined the trip to LA for them.
Earlier on Sunday, the South Africans showed massive resilience to fight back for a well-deserved 17-14 victory (half-time 7-7) over Argentina in their final pool match.
A strong start by the Bok Women, pushing Argentina back with some strong defence, saw Ayanda Malinga cross for the first try of the match, but thereafter they lost their way a bit, conceding a string of penalties - and a yellow card to Zandile Masuku - to allow the South Americans back into the match.
With Masuku off the field, Sofia Gonzalez and Maria Taladrid scored on either side of the break to take a 14-7 lead, and the Bok Women looked a bit rattled as they were stuck in their own half of the field.
With Argentina hot on the attack, Nadine Roos forced a turnover in the SA 22 and sent Maria Tshiremba away for a try 85m downfield to make it a two-point game.
From the restart, the South Africans applied massive pressure and after a few penalties against Argentina, Leigh Fortuin finally crashed over for the winning try more than a minute after the full-time buzzer had sounded.
Scorers:
South Africa 17 (7) Argentina 14 (7)
SA - Tries: Ayanda Malinga, Maria Tshiremba, Leigh Fortuin. Conversion: Nadine Roos.
Argentina - Tries: Sofia Gonzalez, Maria Taladrid. Conversions: Gonzalez (2).
South Africa 14 (7) Kenya 17 (10)
SA - Tries: Nadine Roos, Shiniqwa Lamprecht. Conversions: Roos (2).
Kenya - Tries: Freshia Oduor (2), Sharon Auma. Conversion: Sinaida Nyachio.
