The Mustangs allowed 335 yards rushing Saturday in losing their fifth straight to the Midshipmen, 24-17.
SMU (6-4) was done in by miscues at key times. J.J. McDermott threw two first-half interceptions, including one in the end zone to end a scoring threat.
The Mustangs also failed to score after they recovered Matt Aiken's muffed punt deep in Navy territory.
"We made too many mistakes," said Cole Beasley, who scored two touchdowns for SMU. "You can't make turnovers and beat that kind of football team"
Zach Line rushed for 135 yards, his eighth 100-yard effort this season, and Beasley's 2-yard run pulled SMU within 24-17 with 3:40 left. Navy has won eight of nine overall against SMU since 1995.
"If we don't make the mistakes, we probably win the game," SMU coach June Jones said.
Things won't get any easier for the Mustangs next week as they play at No. 11 and undefeated Houston. SMU was on the verge of making the Top 25 last month when it started 5-1, but has lost three of four since.
Navy quarterback Kriss Proctor rushed for 107 yards and John Howell scored the go-ahead touchdown as the Midshipmen - who didn't complete a pass all game - stayed in bowl contention.
After Beasley's touchdown, the Midshipmen ran out the clock with the help of an 8-yard run on third-and-6 from Gee Gee Greene, who was sent airborne on the play. Navy coach Ken Niumatalolo was jumping up and down on the sideline after Greene's effort.
Navy (4-6) is guaranteed a spot in the Military Bowl if it can beat San Jose State and Army. The Midshipmen are shooting to play in their ninth straight bowl game.
"We continue to fight, scratch and claw," Niumatalolo said. "That's Navy football."
This game was a preview of sorts if the two teams wind up in the Big East.
The teams are also connected by late coach Frank Gansz and have a trophy in his honor. After playing center and linebacker for Navy from 1957-59, Gansz coached for 38 seasons - 24 in the NFL and 14 in college, including for Navy and SMU.
SMU scored on its opening drive of the second half to tie the game at 10 on J.J. McDermott's 7-yard touchdown pass to Beasley.
Navy responded on its next drive to take the lead for good. Howell finished off a 78-yard march with a 1-yard run, giving the Midshipmen a 17-10 advantage with 5:17 remaining in the third.
SMU had a chance to tie things late in the third when Chris Banjo recovered Aiken's muffed punt at the Navy 25. The Mustangs couldn't take advantage of the miscue and didn't gain a first down on the ensuing possession as McDermott's fourth-down pass was knocked away.
"We went for it and had a chance to convert it," Jones said. "We just didn't."
After the failed fourth-down attempt, Mike Stukel's 5-yard TD run early in the fourth quarter gave Navy a 24-10 lead.
Navy's bid for a bowl appearance took a hit when it lost six in a row before beating Troy last weekend. The Midshipmen need six victories to play in the Military Bowl.
Former President George W. Bush and wife Laura attended the game and participated in the pregame coin toss with captains from both teams.
Navy downs SMU, 24-17
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