Chasing just 133 for victory, England were bowled out for 88 in 17.4 overs.
No England batsman crossed 20, with Ravi Bopara top scoring with 18.
Right arm pacer Mudassar Bukhari took 3/12 and Logan van Beek grabbed 3/9 as England crumbled to one of their most embarassing defeats ever.
Earlier, Netherlands could muster just 133/5 in 20 overs on the back of some good bowling from Stuart Broad and Ravi Bopara. Wesley Barresi top scored with 48 for the Netherlands.
Both England and Netherlands have already been eliminated from the tournament.