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The Irish had more penalty corners and goal attempts than the Dutch but lacked a cutting edge.
After the Irish twice went close, Mink van der Weerden and Jorrit Croon netted for the Dutch inside eight minutes.
In the second half, goals from Van der Weerden, Mirco Pruijser and a Eugene Magee own goal completed the scoring.
After Saturday's opening 3-2 defeat by India, the Irish were always going to be up against it as they faced a nation that they had only beaten once in 39 previous meetings.
However, the underdogs made a promising start as Dutch keeper Jaap Stockmann had to make final early saves to deny Mitch Darling and Jonathan Bell.
But within a minute, the Netherlands had two goals on the board as Van der Weerden punished Alan Sothern's loose sliding tackle and Rogier Hofman then sent up Croon to score.
After the break, a succession of Irish attacks came to nothing before Van der Weerden hammered to the roof of the net in the first Dutch counter of the second period.
Pruijser quickly added the fourth with Ireland's painful night being completed by Magee turning a Jeroen Hertzberger cross into his own net with a minute remaining.
Ireland coach Craig Fulton urged his team to "keep the spirits high" despite Sunday's reverse as they still remain in contention for a quarter-final place.
"We are playing good hockey. We are getting punished for our mistakes as you will at this level," said Fulton.
Ireland next meet reigning champions Germany on Tuesday which will be followed by must-win games against Canada on Thursday and Argentina on Friday.
Ireland: D Harte, J Jackson, R Gormley, M Watt, J Jermyn, E Magee, K Shimmins, M Darling, K Good, P Gleghorne, C Harte. Subs: J Bell, C Cargo, A Sothern, P Caruth, S O'Donoghue
Netherlands: J Stockmann, G Schuurman, B Bakker, S van Ass, J Hertzberger, S de Wijn, S Baart, M Pruijser, R Hofman, R van der Horst, M van der Weerden. Subs: V Verga, R Kemperman, B de Voogd, J Croon, H Turkstra
Ireland's men remain without a point in their Olympic hockey campaign after suffering a 5-0 defeat by world number two ranked the Netherlands.