Originally Posted by
hamishspence
He lost the ring (at least in the books, and Tolkien tie-material like his Letters) because the body that wore the ring was killed by the heroes Elendil and Gil-galad - who died in the process.
Letters:
"It ends with the overthrow of Sauron and destruction of the second visible incarnation of evil. But at a cost, and with one disastrous mistake. Gilgalad and Elendil are slain in the act of slaying Sauron. Isildur, Elendil's son, cuts the ring from Sauron's hand, and his power departs, and his spirit flees into the shadows."