The Blues and the Waratahs scored three tries apiece in Auckland, but it was the home side which ran off 32-29 winners at Eden Park.
The Sydney-based outfit had relinquished their spot at the top of the Australian Conference, and were looking to reclaim it once more against a side which has gone three matches unbeaten.
They were immediately on the back foot as Tom Robinson crossed over for the Blues with just eight minutes on the clock – Otere Black adding the extra two.
Eight minutes later, the hosts had another seven pointer after their pivot converted Caleb Clarke’s try.
The ‘Tahs got on the board through Israel Folau, who eclipsed All Black great Doug Howlett for the most tries in Super Rugby by bagging his 60th try.
With the score at 17-7 to the hosts, the Waratahs reduced the deficit to three points after Will Miller dotted down with Bernard Foley adding the extras.
The Blues would take the three-point lead to the break, and extended it to eight six minutes from the restart as TJ Falane dived over.
Alex Newsome scored for the Waratahs in the 54th minute with Foley slotting over, taking them to within one point before veteran Ma’a Nonu responded soon after, with Black taking the score to 29-22.
Foley and Black traded penalties before Waratahs scrumhalf ensured a nervy finish by diving over with just five minutes remaining.
Foley missed the conversion, and the visitors would fall three points short as the Blues claimed a fourth straight victory.