The 20-year-old had claimed the title at the previous two European Championships, both held in Eindhoven in 2008 and 2012.
But the recently-crowned Commonwealth Games champion was unable to make it a hat-trick of golds as he was beaten by Russia's Victor Minibaev.
Daley was awarded 535.45 points from the judges for his six dives, including a number of tens and 102.60 points for his Back 3 Somersaults piked.
However the Russian would go on to post 586.10 to take top spot with Germany's Sascha Klein winning the bronze, although Daley remained upbeat about his performances off the boards.
"I'd have loved to retain my title, but I'm really pleased with the way I dived," he said.
"It was a good fight until the end. A very long season has come to an end and I'm happy to have been able to maintain my level all the way through.
"Out of all three majors, that was the highest score I got out of all of them."
Elsewhere Hannah Starling and Alicia Blagg finished sixth in the final of the women's 3m synchro final.
The duo scored 297.87 to finish 30 points behind gold medallists Tania Cagnotto and Francesca Dallape of Italy.
- Sports & Recreation
- Sascha Klein