The Light Blues took the lead three times in the first half after an early own goal and strikes from Daniel Candeias and Glenn Middleton, on his second start for the club.
But Rangers had been pegged back by a Lorenzo Melgarejo back-post header and a Connor Goldson own goal, each time after Jon Flanagan had been caught out at left-back.
And they conceded twice in a minute just before the hour mark, when Luiz Adriano headed home on the rebound and Goldson deflected Sofiane Hanni’s strike past Allan McGregor.
It was a first defeat in 12 Europa League matches under Gerrard and saw Rangers slip from top of Group G to third place.
“I’m very disappointed with the result,” the Rangers boss said. “You saw the two sides of our performance.
“We attacked very well, we looked very dangerous and countered very bravely and got our rewards for that.
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“We were in control of the game until half-time but football is about levels and if you don’t defend properly, if you don’t do the basics well enough, high-level teams will punish you and that was the case.
“We didn’t clear our lines at the right times, at times we weren’t in the right positions. Players who have had a lot of praise, who have done very, very well to get us to this opportunity, just didn’t do the basics well.
“The goals we conceded in the first half were nothing to do with tactics, they were to do with individual basic errors.
“The message at half-time was, ‘it’s 3-2, if you defend better we either win the game or at worst case come away with something’. But we had a terrible five minutes and were punished for it.
“Normally you come away to a place like this and get three goals, you expect to at least get a result. We should have had four goals but that’s another story. I’m bitterly disappointed with how we defended.”
Gerrard was alluding to a disallowed goal by Alfredo Morelos just before half-time with Rangers 3-2 ahead, and replays suggested the striker was onside.
When asked if it was a big decision, Gerrard said: “It is now of course and it’s difficult as a manager to answer those questions like that without saying the wrong thing and getting into big, big trouble.
“We lost the game because of ourselves defensively but on another night we could have come away with a 4-4.”