In the fifth game of the best-of-seven series, defending champions the Nuggets won a tense encounter 108-106.
Jamal Murray scored 32 points, including the winner with just 3.6 seconds left when the scores were tied.
James’ 30 points and 11 assists were in vain for the Lakers.
The NBA’s all-time leading points scorer was chasing his fifth title and his first with the Lakers since 2020.
But when asked about his future, James would not confirm whether he had played his last game for the Lakers. “I’m not going to answer that,” he said.
“I just want to get home to the family, honestly, and start looking at the schedule.”
He said that after spending some time with his family, he will travel to Las Vegas for a USA Basketball training camp ahead of the Olympics.
Elsewhere in the Western Conference, the Oklahoma City Thunder also progressed to the last eight with a 97-89 win over the New Orleans Pelicans.
Jalen Williams scored 24 points and Shai Gilgeous-Alexander added 24 with 10 rebounds to complete a 4-0 series clean sweep.
The Thunder had a slender 44-43 advantage at half-time, before the Pelicans took a 80-75 lead but could not cling on as they struggled defensively.
In the Eastern Conference, the Boston Celtics edged closer to the next round as they took a 3-1 advantage in their play-off series with the Miami Heat.
They won the fourth match 102-88, but were dealt an injury concern as centre Kristaps Porzingis limped off the court with a calf strain shortly before half-time, and did not return.
Derrick White’s career-best 38 points helped the Celtics to victory, with the fifth match of the best-of-seven series taking place today.