The Blues were gallant in defeat, eventually brought undone by Barry Hall's match-winning six goal haul.
The 15.5 (95) to 12.12 (84) defeat dealt a huge blow to the finals hopes of Carlton, who came into this game just one place behind the Swans on the ladder following the Roos' win over Essendon on Friday night.
The Blues, aiming for four straight wins for the first time since 2001, were given little chance of upsetting the Swans considering they were forced to go into the game without their two best forwards in Brendan Fevola (suspended) and Lance Whitnall (injured).
But when the home side, roared on by a big pro-Carlton crowd and with Scott Camporeale inspirational shot to an 18 point lead early in the final quarter, it looked as though the Blues would produce their most important and most character-filled win of the season.
However it was from that moment that Blues' fans could only watch helplessly as Hall showed at the other end just how much Carlton was missing the presence of its own spearhead in Fevola at the other end of the ground.
When the game had to be won Hall stood tall, taking a strong contested mark at the 11 minute mark to reduce the Blues' lead to six points and then taking another mark at the 17 minute mark to cut the lead to a point.
And after Paul Bevan had regained the lead for the visitors with a great goal on the run, Hall sealed the thrilling comeback win with another mark and goal at the 27 minute mark.
Hall finished the game with six goals and in stark contrast at the other end the Blues, without Whitnall and Fevola, had no player capable of kicking more than two.
But despite that it appeared the Blues were going to win for much of the second half after coming back from a 21 point half-time deficit, set up by four Swans' goals in the last seven minutes of the first half.
Aided by the Swans' constant overuse of the ball - Sydney had 33 more possessions for the game yet won by just 11 points - the Blues stormed back into the game in the third term as Barnaby French, Nick Stevens and Camporeale began to dominate the midfield battles.
By the last change the Blues were just a point down and when Camporeale kicked two great goals on the run early in the last quarter the delirious Carlton fans were anticipating an upset.
However in the end the Blues just had no-one capable of finishing off the Swans in attack as Fevola and Whitnall watched helplessly from the grandstand while at the other end Hall showed just how important a team's spearhead can be as he ensured Sydney downed Carlton for the sixth successive time for the first time in their history.
Carlton coach Denis Pagan said that for all but two short periods of the match he felt his team had done a terrific job.
"We fell asleep just before half time and they kicked four goals. Whether it was immaturity or lack on concentration, late in the game, they kicked the last five goals," Pagan said.
"We did a lot of good things, there were a lot of positives but it was just disappointing that we lost the game when we had every chance to win it."
While Pagan stressed improvement was needed among his group, inexperience had played its part in his side's poor finish to the game.
"It's the by-product of young footballers who haven’t played in those sorts of games. Even at the start of the last quarter I think we may have got a little excited," he said.
"For whatever the reason, in the flow of the game, perhaps against experienced opposition, we pay a price."
Carlton: 3.1 4.7 9.10 12.12 (84)
Sydney: 3.2 8.4 10.5 15.5 (95)
Goals: Carlton: Stevens 2, French 2, Camporeale 2, Walker, Lappin, Fisher, DeLuca, Norman, Koutoufides
Sydney: Hall 6, O'Loughlin 2, Nicks, Mathews, Fixter, Kennelly, Ablett, Kirk, Bevan
Best: Carlton: Camporeale, Stevens, French, Lappin, Koutoufides, Prendergast, Teague
Sydney: Hall, Kirk, Mathews, Crouch, Bolton, Maxfield
Injuries: Carlton: Nil
Sydney: Fosdike (groin) replaced in selected side by McVeigh, Roberts-Thomson (achilles), Ball (back spasm)
Umpires: McBurney, Hendrie, Nicholls
Crowd: 26,172 at Optus Oval
