Goel, 48, lost to a political new comer Larry Kaifesh, 46, who was declared winner with 71 per cent of the votes in Republican primary held in Illinois this week.
"It feels great," said Kaifesh, a colonel in the Marine Corps Reserve, who played up his military service and commitment to rein in the national debt as he drew support from several Republican township organisations.
"We worked long and we worked hard. I'm just happy that our message got out there and resonated with the people," he said after the victory.
During her campaign was publicly espousing the development model of Gujarat Chief Minister Narendra Modi.
As a Republican, Goel ran a campaign in strong opposition of Obamacare, vowing to do all she could to repeal the controversial healthcare legislation.