The Waratahs stunned the Crusaders with four tries in the opening half hour but the home side roared back to extend New Zealand's winning streak over Australian teams to 39 consecutive matches.
The Crusaders snatched the lead with a penalty try 12 minutes from the siren, their forwards having repeatedly routed their opponents' scrum.
Yet the Waratahs still had a chance to claim what would have been by far the biggest upset of the season when flyhalf Bernard Foley lined up a penalty from 40 metres out, directly in front, in the 76th minute.
His kick sailed well wide and the Crusaders held on in a frenetic finish to leave the Waratahs heartbroken.
"I don't know where we were in that first 25 (minutes) but full credit to the boys, we were nice and calm out there the whole time even though we were down whatever points," Crusaders captain Sam Whitelock said in a post-match interview.
"We stuck to what we knew would work and we came over the top in the end.
"Coming from behind, getting one like that, that's special."
The Crusaders' ninth win of the season snatched back top spot in the New Zealand conference after the Wellington Hurricanes briefly dislodged them by beating the Auckland Blues on Friday.
The Waratahs, who lead the Australian conference, will leave Christchurch kicking themselves, having been handed two yellow cards either side of halftime.
Scrumhalf Nick Phipps was sent to the bin for a cynical foul in defence after the halftime siren, with winger Taqele Naiyaravoro going off in the 53rd minute for a deliberate knock-on.
The Crusaders duly took advantage with winger Seta Tamanivalu and replacement back Braydon Ennor scoring tries while their opponents were a man down.
The Waratahs will nonetheless feel hugely aggrieved after local referee Ben O'Keeffe and an all-New Zealand panel of officials failed to punish a blatant high hit by prop Joe Moody on Kurtley Beale in an off-the-ball incident.
Moody raised an elbow into Beale's face, flattening the Wallabies inside centre, before collecting a pass and thundering over for the Crusaders' first try in the 35th minute.
A blow that would normally result in a red card and a disallowed try was somehow missed and the Crusaders rolled on to score another two tries, pegging the deficit back to 29-19 at halftime.
The Waratahs were also left fuming after a possible tip tackle went unpunished during the final play of the game, denying the visitors a penalty and a last shot at goal to win the contest.
O'Keeffe ignored Waratahs captain Michael Hooper's calls for a video replay of the incident and the Crusaders forced a turn-over to seal victory.
"We knew it would go right down to the end, probably our discipline hurt us in the end, two yellow cards," Hooper said. "We're disappointed we let that one slip there particularly when you go out with such a lead." (