Phinney was beaten in a group sprint by Alexander Kristoff of Norway for the bronze medal. Alexander Vinokourov of Kazakhstan won the gold and Rigoberto Uran of Colombia took silver.
"Some would call fourth place the worst to arrive at the Olympics," Phinney said, "but I won't focus on that. I'll get over it. But first I have to thank the team."
The American team spent most of the day causing chaos for the heavily favored British team of sprinter Mark Cavendish. U.S. champion Timmy Duggan was part of an early break that dictated the tempo of the race, and Tejay van Garderen joined him before the run-in to the finish.
"It's epic to see a team so well bonded when everybody knows that they can win," U.S. captain Chris Horner said. "There's no doubt Tejay can win. There's no doubt I can win under the right circumstances. There's no doubt (Tyler) Farrar can win. You saw a fabulous U.S. team today."
Phinney, a former individual pursuit world champion on the track, wasn't expected to have much success over a course geared toward sprinters. He should have a better chance of success in Wednesday's time trial.
Phinney won the opening time trial at the Giro d'Italia earlier this year.
"I gave everything I had," Phinney said. "I has cramping on Lap 8 and Lap 9, and really felt terrible the last 40 kilometers, but as we got closer to the finish, the crowds were so loud.
He just didn't have enough in the shadow of Buckingham Palace.
"The riders came prepared to execute today, and the race played out like we thought it would," said USA Cycling's Jim Miller, who put the team together. "We had a tactic in mind for this course and all day long everyone rode a great race."