Jason Donohue's side came from behind twice, with second-half goals from captain Cian Kelly and Michael Leddy giving Ireland a deserved draw.
Under tournament rules, a penalty shoot-out follows all draws and the Dutch won 4-2, with Luke McGlynn and Evan Ferguson finding the back of the net for Ireland.
All 20 players in the squad have now started a game, with Sean Grehan and Ciaran O'Sullivan making their debuts in Friday's encounter.
Speaking after the match, Donohue was proud of the effort his side have shown this week in Spain.
"The lads were terrific. It was a cagey first half, but after the break we played excellently. We have a lot of character and maturity in this team. The togetherness of the squad showed in the second half. The team really stepped it up today against the Dutch.
"All 20 players have started one of our opening two games, and none of them looked out of place. I couldn't be any prouder of them," said Donohue.
The team conclude their tournament with a match on Sunday against Hungary.
Republic of Ireland: Lee Morris; Craig King (Ben Curtis 44), Sean Grehan, Aaron O'Reilly, Cian Kelly (capt); Glory Nzingo (Luke McGlynn 52), Jamie Mullins (Darragh Reilly 52), Edwin Abaje (Michael Leddy 44); Ben Quinn, Evan Ferguson, Ciaran O'Sullivan (John Ryan 44).
Netherlands: Charlie Setford, Sem Dekkers, Timo Zaal, Sil Swinkels, Thomas Kirkpatrick, Raphael Sarfo, Livano Comenencia (capt), Tijmen Niekel, Chahid El Allachi, Tyron Perret Gentil, Divaio Bobson
Referee: Jose David Martinez Montalban (Spain).