The Lions had beaten the Crusaders, 13 wins from 13 in Super Rugby this season and 497 points to their name, on Saturday and limited them to no tries but the Highlanders were across the whitewash after just 26 minutes.
Jonathan Joseph levelled for the Lions before the break before two more tries after the break gave them a 22-13 lead.
However, Liam Coltman scored from a driving maul before a late Marty Banks penalty gave Highlanders a famous one-point victory.
Stuart Hogg had been ruled out of the tour with a facial bone fracture before the game so Jared Payne had the chance to put his hand up for the 15 shirt.
Payne was immediately tested as the Highlanders started the game very much on the front foot.
Waisake Naholo, he of six tries in 12 All Blacks caps, found only the Irishman between himself and the try-line but Payne was equal to the challenge.
Seconds later, his countryman Robbie Henshaw had to be similarly sturdy to deny a three-on-two opportunity in the other corner but the Highlanders eventually won a penalty in front of the posts to take an early lead.
Rhys Webb thought he had the first try of the game minutes after Biggar levelled things but the TMO decided that Webb knocked the ball on before going over.
Malaki Fekitoa had been off the field having a Head Injury Assessment but when the centre returned he immediately had an impact.
The Tonga-born All Black does not appear to be part of Steve Hansen’s plans having not been selected this year but would sent him a poignant reminder had Webb not dragged him down when he burst through the defensive line.
The Wales scrum-half was bright all game in attack and defence but it was the Highlanders who struck the first serious body blow, Waisake Naholo going over from 10 metres out.
It was a double blow for the Lions, who saw Courtney Lawes apparently concussed by the run of Naholo and ruled out of the rest of the game.
Alun Wyn Jones replaced him and the Lions were soon level through Joseph.
The centre benefitted from a superb carry by CJ Stander in midfield and the Irishman was able to offload quickly, allowing Joseph to throw a dummy in the outside channel and convert the numbers into five points.
Biggar, whose had taken Stander’s offload and found Joseph, slotted a fine conversion from out wide and the scores remained level until the break.
But the tourists were ahead almost immediately after the restart as Lima Sopoaga went for an ambitious cross-field kick which only found Tommy Seymour and the winger streaked away to score.
Warren Gatland began to ring the changes, removing Kyle Sinckler and Rory Best while the excellent Webb was forced off with an injury.
The rhythm of the Lions remained though and a self-inflicted scrum against the Highlanders on their own line led to another try, captain Sam Warburton picking up and scoring from eight metres out to give the injury-stricken flanker a huge confidence boost.
More replacements followed Biggar’s conversion that made it an eight-point lead but it took just six minutes for the Highlanders to get back within a score.
Outstanding counter-rucking from Iain Henderson and CJ Stander saw the Lions end a period of concerted pressure on their own line, only for another penalty to allow the home side right back into the corner.
The line-out worked to perfection and the Lions failed to defend the drive, All Black injury cover hooker Coltman dotting down at the back of the maul.
The conversion cut the lead to just two points and with six minutes left, Aki Seuli produced a brilliant shove against Dan Cole to win a penalty which Marty Banks duly slotted the winning penalty.
The Lions were sloppy at the restart but were afforded a penalty from all of 56 metres out, within the range of Elliot Daly, but his massive left-footed kick fell inches short of the crossbar.
The tourists had one last chance in midfield but it was Joseph who dropped the ball 20 metres out, a knock-on that brought the final whistle.
