The Blues had opportunities to put an end to Queensland's supremacy but ultimately weren't clinical enough in the key moments and so the Mal Meninga-coached Maroons were able to hold on in a thrill-packed decider.
Watching the stunning contest were players and management from football giant Manchester United - in Sydney to play the A League All Stars on Saturday - as well as the Vodafone Warriors, who had just flown in to prepare for Friday night's NRL clash against Wests Tigers.
Queensland went to an 8-0 in the first quarter after Johnathan Thurston had scored a try, converted it and kicked a penalty.
But the momentum switched in the second quarter with winger James McManus scoring and New South Wales going close again before the half was out. Instead they went to the break down 4-8 and were 4-12 behind after an unconverted Justin Hodges try in the 61st minute.
The Blues were by no means done, steaming back into the battle with Trent Merrins try in the 71st minute, James Maloney converting to leave New South Wales trailing 10-12.
Huge drama followed in the dying minutes when a would-be Matt Scott try was ruled out after a streaker managed to get onto the field. It would have taken the Queenslanders out of danger but instead they had to hang in tough over the final few moments to protect the two-point lead.
Queenslands completion rate was exceptional at 88 per cent (29 from 33 sets) but New South Wales had more shots with the ball completing 32 of 40 sets.
Former Vodafone Warrior Brent Tate had an exceptional game, picking up the man of the match award.
New South Wales 10 (James McManus, Trent Merrin tries; James Maloney conversion).
Queensland 12 (Johnathan Thurston, Justin Hodges tries; Johnathan Thurston conversion, penalty).
Halftime: 8-4 Queensland.
Referees: Shayne Hayne and Ben Cummins.