The Lib Dem leader in Edinburgh failed to secure enough votes to win the Meadows-Morningside constituency as her party took a hammering at the polls.
The veteran city politician stood in her home district instead of her existing ward in Drum Brae-Gyle in an attempt to secure a larger vote and remain in office.
Afterwards she told reporters at Meadowbank Stadium that she had anticipated a poor result.
A number of voters intentionally spoiled their ballot papers writing insults relating to the tram project.
However, Dawe said one of the major issues when speaking to voters on the door step was criticism of deputy prime minister Nick Clegg, who formed a coalition with the Conservatives in 2010.
She said: “It was as I expected. I had a bad feeling about this election from the very beginning.
“I had my boxes all packed with notices of where they’re to go.”
Of Nick Clegg, she said: “People didn’t like what was happening at Westminster. I don’t think it was so much the Coalition as the deputy prime minister in particular. It seems to get quite personal towards him.”
Of her time in office, she said: “I stuck to my ideals, I stuck to my principles, but honesty and realism don’t always win elections.”
Asked why her party has performed so poorly at the polls, she said: “It’s a combination of national issues and local issues but I’m not surprised.
“[Trams] wasn’t mentioned very much on the doorstep but clearly there were ballot papers which had the trams written on it.
“That was the right thing to do, if somebody doesn’t approve of the trams they have the right not to vote for anybody because all the major parties at some stage had voted for the trams.
“It was a project that we inherited, [but] we voted for it in the beginning, we managed to turn it around and get things going the right way now.
“And I guess the next administration will reap the benefit of the five years and hard work and integrity we’ve put into running the council.”
She added: “I’ve done my best, I’ve been as honest as I can be, I’ve been realistic, I’ve not made false promises.
“We’ve turned the city around from a situation where we inherited £370,000 in reserves and turned that around to £14m.”