Bennett was under fire for voting to bail out Wall Street, co-sponsoring a bipartisan bill mandating health insurance coverage and for aggressively pursuing earmarks.
"The political atmosphere obviously has been toxic, and it's very clear that some of the votes that I have cast have added to the toxic environment," Bennett told reporters Saturday, choking back tears.
"Looking back on them, with one or two very minor exceptions, I wouldn't have cast any of them any differently, even if I had known at the time they were going to cost me my career."
Bennett told The Associated Press he wouldn't rule out a write-in candidacy. State law prohibits him from running as an independent.
"I do think I still have a lot of juice left in me," Bennett said following his loss. "We'll see what the future may bring."
Bennett survived a first round of voting Saturday among roughly 3,500 delegates but was eliminated when he finished a distant third in the second round. He garnered just under 27 percent of the vote, while businessman Tim Bridgewater had 37 percent, and attorney Mike Lee got 36 percent. Lee and Bridgewater will face each other in a June 22 primary after a third round of voting in which neither got the 60 percent necessary to win outright.
"Don't take a chance on a newcomer," Bennett had pleaded in his brief speech to the delegates before the second round of voting began. "There's too much at stake."
Yet that urging, and Bennett's endorsements by the National Rifle Association and former presidential candidate Mitt Romney, did little to stave off anger toward the Washington establishment from delegates.
"The bailout bothers me. That in and of itself is unforgivable in my opinion," said delegate Scott White, a 58-year-old general contractor from Taylorsville.
Bennett initially faced seven Republican opponents who said he wasn't conservative enough for ultraconservative Utah. Lee, 38, and Bridgewater, 49, campaigned largely by saying they're better suited to rein in government spending than Bennett.
"I will fight every day as your U.S. senator for limited government, to end the cradle-to-grave entitlement mentality, for a balanced budget, to protect our flag, our borders and our national security and for bills that can be read before they receive a final vote in congress," Lee said in his convention speech.
Bennett's defeat is the latest in a series of surprising political developments in a year in which the tea party movement has amassed growing power.
In January, then-little-known Republican Scott Brown won the Massachusetts Senate seat long held by the late Edward Kennedy. Several incumbents from both parties have opted not to seek re-election as they face difficult challenges, and GOP Florida Gov. Charlie Crist recently opted to run as an independent in his Senate bid rather than face defeat at the hands of his own party.
Other GOP candidates likely were eyeing Saturday's results to see if it's an indicator of things to come.
In Arizona, Sen. John McCain is in a tough primary fight against former Rep. J.D. Hayworth, a conservative talk-radio host. In Kentucky, Rand Paul, the son of libertarian Rep. Ron Paul of Texas, is gaining momentum in his challenge against the GOP establishment's pick of Secretary of State Trey Grayson to replace retiring U.S. Sen. Jim Bunning.
In New Hampshire, former Attorney General Kelly Ayotte is battling three Republican challengers to fill the seat being vacated by Republican Judd Gregg.
Opposition to Bennett couldn't be chalked up solely to anti-incumbency fervor.
Neither of Utah's two Republican congressmen were at risk of losing their seats, and Republican Gov. Gary Herbert easily won his party's nomination. Last week, voters in primaries in North Carolina and Ohio retained their incumbents, while those in Indiana turned to a former senator -- Republican Dan Coats.
"I have authored bills to rein in the entitlement spending that now makes up two-thirds of the federal budget," Bennett said. "I've already voted for a balanced budget amendment three times, and I will again while making certain that it won't be turned into a tax increase for Democrats. Our tax burden is already too high."
Some delegates, who tend to be more conservative than other Utah Republicans, were also upset he's still in office after promising to serve only two terms when first elected in 1992.
"I think he's lost touch," said delegate Gary Crofts. "I'm excited to get a new person in there and fire things up a little."
Romney introduced Bennett on Saturday -- to a mix of cheers and boos.
"Today, he faces an uphill battle at this convention," Romney acknowledged in his speech. "Some may disagree with a handful of his votes or simply want a new face. But with the sweep and arrogance of the liberal onslaught today in Washington, we need Bob Bennett's skill and intellect and loyalty."
In his 2004 campaign, Bennett ran no television commercials and won a third term in the general election with 69 percent of the vote.
The 2010 campaign was clearly different. He acknowledged he should have spent more time in Utah the past couple of years letting GOP activists get to know him, but didn't imagine Republicans would be angry enough with Washington to target one of their own.
Recently, he has said part of his problem with delegates has been that he doesn't go on conservative cable talk shows and offer angry sound bites. Instead, he said he likes to work on finding practical solutions.
Utah's unique nominating process also played a critical role in his defeat. The 3,500 delegates wield enormous power and can decide the fate of entire elections in a state of nearly 3 million. The winner of the Republican race is all but guaranteed victory in November over Democratic nominee Sam Granato because Utah is so overwhelmingly GOP.