A First half James Constable penalty saw Barrow lose for the first time since late September, as Oxford maintained their position at the top of Blue Square Premier.
However the Bluebirds gave a decent account of themselves and can make the return FA Cup next weekend with confidence that a result is possible.
Stuart Tomlinson was adjudged to have impeded Constable in the 27th minute and the spot kick was to decide the game.
Tomlinson made one other fine save and Oxford spurned a couple of chances from crosses, but Barrow also had their opportunities.
Jason Walker was denied a seemingly certain penalty when he appeared to be pushed in the area and both Paul Rutherford and Carlos Logan might have equalised late on.