Having fallen to the foot of the Premier League at the weekend, the west Londoners were in desperate need of a morale-boosting victory against the League One strugglers in Tuesday night's fourth-round replay at Craven Cottage.
Instead, the Whites' miserable season reached a new low as Shaun Miller's last-gasp header secured the side 23rd in League One a 1-0 extra-time victory.
It was an insipid display from the hosts and one which manager Meulensteen admitted would leave them facing "big problems" if it was repeated.
Asked if this was the worst performance since he succeeded Martin Jol, he said: "Yeah, definitely.
"It is very disappointing. It is as bad as the weather - the result, the outcome, the performance. That sums it up. It was a poor night all-round.
"It is no big secret (why we performed like this). When you get into a situation where the results aren't going for you, when you are playing well and putting in a lot of effort, bit by bit it keeps knocking your confidence and what you saw today was a team that lacked confidence.
"You could see that in some of the performances. There was not enough cutting edge and quality at times.
"Then you see trends in the game, really, that you don't want to see in terms of the way I want to play.
"We knew Sheffield United would work hard, get a lot of bodies behind the ball.
"That is not an excuse and we had to break them down. On the night, it wasn't good enough."
The frustration amongst the Fulham faithful was audible and highlighted when Hugo Rodallega was jeered off the field when substituted in the second half.
The Colombia international appeared to take the reception personally as he sat head-in-hands on the bench, but Meulensteen downplayed that incident.
The former Manchester United coach also dismissed speculation over his future.
Bookmakers make Meulensteen favourite to be the next manager out of a job, fresh on the back of reports that technical director Alan Curbishley could be drafted in as his replacement.
"Listen, (the owner's confidence) will only last until that is gone," Meulensteen said.
"Until that time, I will just jeep doing the job the best I can. I have no worries in that respect at all."
Fulham now face the unenviable task of trying to get a result at Manchester United, while Sheffield United host Shrewsbury this weekend.
The Blades languish in the League One drop-zone and manager Nigel Clough hopes the victory at Craven Cottage will boost his ailing side.
"The determination and resolve lacking on Saturday (in the 3-0 defeat to Crewe) we showed in abundance this evening," he said.
"We frustrated Fulham but I thought we were enough of a threat ourselves throughout the course of the game, especially the second half of normal time.
"It is important that we do take something from it and I try and get back on track in the league.
"Some of the performances have been good but we haven't quite had our rewards. We sit second from bottom and have 19 games to get out.
"This is all very well winning at a Premier League side, but the priority remains staying in our league."