With the Storm up 30-20 with three minutes remaining after Sisa Waqa crossed for his fourth try of the game, tries from hooker Travis Waddell and flying winger Akuila Uate made it a second consecutive unbelievable home win for the Knights.
The Storm were left wondering what could've been having squandered a golden opportunity to force their way into the top four, however it wasn't to be with the Knights winning their seventh game of the year.
It was far from positive for the Knights in the initial stages of the game with the Storm drawing first blood in the sixth minute when Cooper Cronk had a crack at the advantage line before putting Kevin Proctor through a gaping hole from 40 metres out. With Sione Mata'utia pressuring Proctor further down field, the back-rower drew in the young Knights fullback to pass it on to Billy Slater to give Melbourne an early 6-0 lead.
The Storm went back-to-back only four minutes later when Sisa Waqa intercepted, albeit with a slight juggle, a Knights backline movement to race the remaining 50 metres down field to score his 13th try of the season.
The Knights had a great chance to post their first points when Storm winger Marika Koroibete clotheslined Dane Gagai in the 16th minute. But with the Knights within the opposition 10 metres, a Joey Leilua error gifted possession back to the Storm almost instantly.
Six minutes later though, Knights milestone man Chris Houston eased the minds of the vocal 14,904-strong Newcastle crowd when he crossed the white stripe. In his 150th game in the NRL, Houston benefited from a Knights backline movement that saw a tackle-busting Akuila Uate break free from the defence and throw a pressure offload to the back-rower for a memorable Newcastle try for the veteran.
The Knights cut the Storm's lead to two points in the 26th minute when Tyrone Roberts crossed for a freakish try. Roberts' ninth try of the season came from a Kurt Gidley kick which was dropped by Will Chambers in the air.
With the ball falling to the halfback, Roberts crossed over the try-line though a cover tackle from the Storm defence prevented him from initially scoring, the defence knocking the ball out of Roberts' grasp in the meantime. With great awareness however, Roberts watched on as the ball bounced off his knee then his foot before falling into his hands once again for him to touch down.
With two minutes remaining in the first half it was some Storm magic that allowed them to get gain a 16-10 halftime lead. The try began with Cronk who fired it out to Tohu Harris. The interchange forward then backed his way into the defence, offloading to a sweeping Slater with the fullback throwing a cut-out ball to Waqa to cross for his second try of the game.
The second half begun with Storm interchange forward Tim Glasby placed on report for a high shot on Sione Mata'utia and by the 47th minute the fullback's older brother Chanel crossed for his maiden NRL try in spectacular fashion in the corner with the winger touching down with half of his body practically over the sideline in the air.
In a quick retaliation, Storm winger Waqa crossed for his hattrick in the 51st minute when another backline movement paid dividends for Melbourne. Though Chanel Mata'utia managed to get a hand to the ball, Waqa had the skills to regather the ball as well as pull off a 360 degree turn and score in the corner inches away from the sideline.
The Storm extended their lead in the 66th minute when Will Chambers powered over past Roberts and Uate to score his ninth try of the season and earn Melbourne a 10-point lead heading into the final 10 minutes after earlier capitalising from a Sione Mata'utia error under the high ball.
Not to be outdone, however, was Dane Gagai who powered over from dummy-half with eight minutes remaining. With Kurt Gidley kicking the conversion the scoreline difference was brought back to four. With the game on the line, a frantic Newcastle flurry was seemingly extinguished by Waqa's fourth try of the game for the Storm to seemingly close it out, up by 10 with less than five minutes left on the clock.
However a brilliant one-on-one strip from Travis Waddell on Slater straight in front of the Storm posts caught the fullback by surprise as he looked to submit in a tackle and help run down the clock.
Kicking off, the Storm simply had to defend one set in the final minute but the defence gave away a penalty as they bundled Adam Cuthbertson into touch and handing the Knights one final chance to steal the game.
Spreading it quickly to the right, the Knights created an overlap and Uate dived over in the corner and brought the entire crowd to its feet and the scoreboard to 30-all.
With the clock having already run out it was up to captain Kurt Gidley to kick a pressure sideline goal. With the crowd chanting "Newcastle" in the background, the five-eighth nailed a conversion that never looked like missing to earn a 32-30 win in extraordinary circumstances.
Newcastle Knights 32 (C. Mata'utia, Gagai, Houston, Roberts, Waddell, Uate Tries; Gidley 4 Goals) def Melbourne Storm 30 (Waqa 4, Chambers, Slater Tries; Smith 3 Goals) at Hunter Stadium. Crowd: 14,904.