Penn was hoping its final game of the calendar year against Toledo would continue the momentum it had built up steaming toward the Ivy League portion of the schedule.
Instead, the Quakers will have to consider 2018 a fresh start, after the Rockets came into the Palestra and shot their way to an 85-72 win on Friday afternoon.
The loss snapped a four-game winning streak for Penn (9-5), which led by four at the half and was within four points with under three minutes to play. But Toledo (8-5) couldn't miss down the stretch, hitting 18 of its last 24 shots over the game's closing 19 minutes.
"I thought even after we led at halftime, I didn't sense that we were playing really solid basketball on either side of the ball," Penn coach Steve Donahue said. "Give Toledo credit, I thought they really executed in the second half. That's obviously one of our weaker, if not our weakest, half defensively this season."
The Rockets, who came into town shooting 37.9 percent from three-point range on the season, were especially unconscious from deep, hitting a season-best 64.3 percent (9 of 14), including 4-of-5 in the second half.
"If you hold a team to 14 attempts — that's one of our goals, under 15," Donahue said. "I thought they were opportunistic every time we slipped down and missed a coverage, they knocked it out."
Tre'Shaun Fletcher had 21 points to pace Toledo, which had four players finish in double figures.
The Quakers had as much trouble making their long-range opportunities as the Rockets did missing theirs. Penn was 26.7 percent (8 of 30) on threes, including just 3 of 15 in the second half.
Ryan Betley had 20 points on 6-of-13 shooting, including 3-for-9 from three. Darnell Foreman added 16 points and four assists.
As a team, the Quakers had 15 assists against six turnovers, but were outrebounded, 37-30, by the Rockets.
Despite the loss, Penn is still off to its best start after 14 games since an identical record in 2005-06. But that record will be meaningless next Friday, when archrival and defending league champ Princeton (7-7) comes to the Palestra to begin the 14-game Ancient Eight round-robin.