Kidderminster scored three first-half goals to end York's 12-match Blue Square Bet Premier unbeaten run.
Jack Byrne's header gave Harriers the lead, only for York to level when Matty Blair slotted home.
Callum Gittings' cool finish restored Kidderminster's advantage and Jamille Matt raced clear to extend the lead.
York were offered a lifeline when Luke Jones handled, but Ashley Chambers missed the penalty, leaving David McGurk's header as a mere consolation.
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York City manager Gary Mills told BBC Radio York:
"It was poor. Taking nothing away from Kidderminster, the first half killed the game for us.
"[They were] three sloppy goals to concede, make no mistake about that. You can't expect to get promoted, you can't expect to win cups, you can't expect to win anything when you defend like that.
"We've come out second half for two weeks running at home and gone a bit desperate again. I'm disappointed because we looked second-best, certainly for the first half."
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