The Minstermen slipped behind on 64 minutes, Andy Owens scoring for the visitors.
Five minutes later it was 2-0 for promotion rivals Southport when Tony Gray netted.
Jamie Reed grabbed a late lifeline for York, netting on 84 minutes but it was too little too late.
York: Ingham, Challinor, Parslow, Gibson, Fyfield, Oyebanjo, Smith, Meredith, Reed, Chambers, Blair. Subs: Moke, Brown, Blinkhorn, Doig, McLaughlin.
Southport: McMillan, Akrigg, Davis, Grand, Smith, Ledsham, Benjamin, Parry, Lever, Gray, Owens. Subs: Nemes, Ellison, Carden, Stephenson, Farran.
Referee: Darren Handley (Lancashire)
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