Dragons had to play an hour of the encounter a man down after an early yellow card to Zane Kirchner and then red for prop Lloyd Fairbrother just after the half hour mark in the capital.
However, the team still took a slender 6-3 lead at the break courtesy of a long range drop goal and penalty from Josh Lewis.
And when Sage scored seven minutes from time – to cancel out Dan Fish’s earlier effort – there was nothing between the teams.
But, in a late dramatic twist, it was Gareth Anscombe who kept his cool to slot a penalty with the last kick of the game to claim slender derby glory for the hosts.
Dragons made five changes to the side that battled away at Clermont with Jared Rosser, Rhodri Williams, Sage, Harri Keddie and Elliot Dee all returning.
And they made a bright start, after the hosts spilled the kick-off, and rattled up the middle with centre partners Adam Warren and Sage making big yards before lock Brandon Nansen crunched into contact.
The home side mounted a first real attack after ten minutes, as the rain started to fall heavily, and the TMO was soon in action after Kirchner illegally tackled Blaine Scully by the touchline and was yellow carded by referee Murphy.
Both teams were trying to adapt to the testing wet and windy conditions, but it was Dragons who had the best of the weather in the first quarter as they looked to strike first.
Anscombe kicked Blues to within five-metres, after two quick-fire penalties, but scrappy set piece ball from the lineout saw Dragons swoop and clear.
A thrilling two-minute spell then saw both teams trade ball before a penalty at the breakdown, for not releasing, allowed Anscombe to open the scoring.
Wales international Anscombe saw another penalty pull up short, as the wind started to whip across the field, before the fly half spilled a horrid swirling clearing kick.
A huge visiting scrum then won a penalty for Dragons and visiting playmaker Lewis produced a sublime touch finder to five-metres out.
However, within minutes the visitors were suddenly reduced to 14 men as Fairbrother was adjudged to have used an elbow at the ruck and was dismissed.
Dragons responded with Lewis slotting a superb drop goal from 35-metres out to level the match going into the final five minutes of a dramatic first half.
And he then went one better with a brilliant judged penalty on the stroke of half-time – that clipped the post on its way over - after the visiting forwards marched the home side backwards.
Cardiff Blues flew out of the traps at the start of the second half, but with the all-action Dee leading the defensive charge the visitors held firm.
Anscombe did level the scores with a long range penalty with just over half an hour to play before the opening try of the game arrived four minutes later.
A slick attacking move down the left flank saw the home backs combine and the ball was eventually worked inside for Fish to go over. Anscombe added the extras for a 13-6 lead.
Lewis ate into the lead as he steered a penalty over into a fierce wind before Anscombe boomed over a huge kick of his own from halfway.
Dragons were refusing to go down quietly and some superb handling skills saw them work the ball right to left before Hallam Amos was just taken down by Matthew Morgan as he threatened to breakaway.
The visitors then silenced the Arms Park as a quite stunning passage of play saw them keep the ball alive and then breakthrough with Sage the man to take the pop pass from Jason Tovey, step inside Morgan and go over. Tovey added the extras to level the game.
A breathless final seven minutes ensued with both teams trading ball before, in a late twist, a final scrum saw the home side awarded a penalty and Anscombe hold his nerve.
Timeline:
19m Anscombe p 3-0
35m Lewis dg 3-3
39m Lewis p 3-6
49m Anscombe p 6-6
54m Fish t Anscombe c 13-6
59m Lewis p 13-9
64m Anscombe p 16-9
73m Sage t Tovey c 16-16
80m Anscombe p 19-16
Dragons: Zane Kirchner (J. Williams 68), Jared Rosser, Adam Warren, Jarryd Sage, Hallam Amos, Josh Lewis (Tovey 68), Rhodri Williams (Knoyle 65); Ryan Bevington, Elliot Dee (Hibbard 68), Lloyd Fairbrother, Brandon Nansen (Evans 78), Matthew Screech (Jarvis 46), Cory Hill, Aaron Wainwright, Harrison Keddie
Replacements: Richard Hibbard, Gerard Ellis, Aaron Jarvis, Lewis Evans, Nic Cudd, Tavis Knoyle, Jason Tovey, Jordan Williams
Cardiff Blues: Dan Fish (Morgan 64), Blaine Scully, Rey Lee-Lo, Willis Halaholo (Shingler 68), Garyn Smith, Gareth Anscombe, Tomos Williams (L. Williams 68); Rhys Gill (Thyer 48), Kristian Dacey, Dillon Lewis (Andrews 66), Seb Davies, Josh Turnbull, Josh Navidi, Olly Robinson, Nick Williams (Earle 66)
Replacements: Kirby Myhill, Brad Thyer, Scott Andrews, George Earle, James Down, Lloyd Williams, Steven Shingler, Matthew Morgan
Referee: Frank Murphy (IRFU)
Attendance: 8,164
