Farrar was within half a bike length of catching British sprinter Mark Cavendish, who clinched his second consecutive win and fourth overall.
"It's frustrating to come in second, but at the same time you can see there are only a few guys going that fast right now," Farrar said after the stage.
"Today was great. It was really fast from (the last) 2 kilometers (1.24 miles) to 500 meters (from the line)."
The 25-year-old Farrar, a U.S. junior national champion in 2002, upset Cavendish earlier in the season to win the third stage of the Tirreno-Adriatico race in Italy in March.
"I think (Tyler) is the best sprinter of his generation -- apart from Cavendish," Jonathan Vaughters, the manager of Farrar's Garmin-Slipstream, told The Associated Press by telephone.
But on Wednesday, Farrar timed his run a bit too late. It was his third top-3 finish of the Tour.
"Maybe he's not quite as fast, and he needs to figure out how to be a little bit more intelligent," Vaughters said.
"And we need to figure out how to be little bit better as a team."
With the win, Cavendish took possession of the green jersey as best sprinter while Rinaldo Nocentini, of Italy, held onto the overall leader's yellow jersey.
"We're all just trying to figure out how to get round Cavendish," Vaughters said.
Cavendish also tied British rider Barry Hoban's tally of eight Tour stage wins -- he got four last year but failed to complete the Tour.
"You can talk all day about how great you are at the dinner table," the 24-year-old Cavendish said.
"Success is the biggest motivation for anyone."
Armstrong, meanwhile, finished safely in the main pack in 54th place and remains in third place overall, with his Astana teammate Contador crossing the line in the 43rd spot, and still in second place overall.
The general classification stayed the same, with Nocentini leading Contador by six seconds. Armstrong, who did not stop for reporters waiting by his team bus, trails by eight seconds.
A mainly flat 119.3-mile trek from Vatan to Saint-Fargeau.
WINNER: Mark Cavendish beat Tyler Farrar, of the U.S., in a sprint finish. The British rider claimed his fourth stage win of this year's Tour by racing ahead in the final 100 meters.
YELLOW JERSEY: Rinaldo Nocentini, of the AG2R-La Mondiale team, held onto the overall lead by finishing in the main pack with Astana duo Lance Armstrong and Alberto Contador. Nocentini was involved in a crash early in the stage but was able to get back on his bike.
QUOTE OF THE DAY: "This is a massive, massive insult to say that the guys are weak. They gave me a massive fight until today, they came close." -- Cavendish, when asked about his rivals' performances this year .
NEXT STAGE: Today's 12th stage is a 131.4-mile trek from Tonnerre to Vittel featuring six minor climbs.