The first half had few chances, with Harry Kane coming closest on the half-hour mark with a shot that went narrowly wide.
Samuel Luke Johnstone was then tested by Egypt forward Hassan Ahmed, but he made a comfortable save.
Alex Pritchard came inches away from opening the deadlock, but his effort rattled the bar.
Then with the game looking like heading to a draw, Mahmoud grabbed the goal to break English hearts and sent his side above their opponents.
In stoppage time Egypt made sure of the result with Ahmed Mahgoub scoring late on.