Mikele Leigertwood scored the winner in the 81st minute to guarantee Reading promotion to the Premier League, but Cotterill is upset as he felt that his side controlled the game.
"I don't think we deserved to lose," said Cotterill. "From 70 minutes onwards I thought we looked the better team and were going to win the game.
"It's a measure of how far we have come as a team in recent weeks is that we were on the road to [League] One and now after playing the top team in the league the lads are sitting in the dressing room disappointed that we didn't win the game.
"But congratulations to Brian McDermott and the Reading boys on their promotion. They deserve it."
Forest sit 19th in the Championship but safe from relegation this season.