This was the 36-year-old's sixth and final Olympic campaign, in which he did three runs of the 1.344 kilometre-long Alpensia Sliding Centre's luge track in two minutes and 28.188 seconds.
Loch's loss translated into big gains for Mazdzer and Gleirscher, who beat out the American by just over two hundredths of a second to become the first Austrian to win the event in five decades.
Mazdzer slid into gold medal contention on Saturday, giving the underdog United States team a glimpse of hope while competing against beasts in the field, such as Germany and Austria. "Indeed it has been like a fairytale".
The 29-year-old athlete won the silver medal for his excellent placement in the event earlier in the day on Sunday (February 11) in PyeongChang, South Korea.
His father Norbert, a former Olympic luger and current head of the German team, clapped his hands and almost head-butted the ceiling with a jump for joy.
American within striking distance of luge medal
Felix Loch made a critical error late in his final run Sunday to surrender his Olympic luge title and make schnapps-drinking David Gleirscher the first Austrian men's victor in the event in 50 years.
Loch was still grinning in the leaders' booth as his rivals took their turns but he was noticeably surprised when Mazdzer bettered his time with a scintillating 47.534-second run to leap into second. But everything fell apart in the final run as Loch looked a shell of his self, unable to control his line down the hill.
"One very bad run but that's sport", said Loch, who was consoled by IOC President and luge fan Thomas Bach at the venue. Gleirscher was faster, but Mazdzer finished in that coveted medal position.
"It's 16 years in the making", Mazdzer, a three-time Olympian, told NBC afterward. "I don't know how to describe it".