Out of form Lincoln struggled in front of their home fans as they went down to a dissappointing defeat.
The Imps fought back after going a goal behind, but were then hit twice on the break to end up a well beaten side.
To make matters worst they finished with 10 men after using all three substitutes and then having defender Paul Morgan stretchered off with a ligament injury.
Things looked bad for Lincoln earlier on with Rushden creating chances.
Stuart Gray shot over in the fourth minute before Kevin Braniff broke clear only to be tackled by Morgan.
Gary Mills shot inches over from 25 yards before Rushden & Diamonds went in front in the 39th minute. Andrew Burgess crossed from the left for Braniff to hit a low shot in off the post from the edge of the box..
Lincoln picked up after the half-time break with Peter Gain beating two defenders before hitting his shot into the side netting.
Marcus Richardson beat Rushden keeper Billy Turley to a 48th-minute cross, but bundled his effort against the post.
Lincoln drew level in the 55th minute when the Rushden defence backed off allowing Gary Taylor-Fletcher to run at them before finishing with a 20-yard shot.
Taylor-Fletcher missed another chance eight minutes later but Lincoln where badly caught out in 69th minute when an excellent pass from Andrew Burgess split open their defence leaving Alex Hay in the clear to score.
Lincoln's Morgan went off injured 12 minutes from time and from then on Rushden were in control.
Craig Dove went close in 85th minute but four minutes later found the net when he went round two defenders inside the box before shooting home.
Lincoln were nearly caught out again in stoppage time when Braniff got into a good position only for his shot to be blocked by Lincoln's Gareth McAuley.