They came back from 2-0 to win 4-3.
And they could finish off Steelers' chances completely on Sunday night in the return match in South Wales.
Cardiff, who have a game in hand over Sheffield, had some good fortune at seeing a Steelers goal disallowed at a critical time,
But you make your own luck in sport - and they must now be huge favourites to win the League.
Afterwards, coach Paul Thompson insisted his side was not out of it: "This is not over."
He says the team has to go to Wales tomorrow and play direct, hard hockey - and pull off their first win of the season at the Big Blue Tent.
Thompson said he'd spoken with officials about the disallowed goal - but said the matter was outside his control.
At the start, Steelers' high tempo offence threatened to create several goal-scoring chances with the Nelson-Vestberg-Stromberg line looking the most dangerous.
Sheffield took the lead after two minutes when Tyler Mosienko tipped home Jace Coyle's point shot from the right.
It filled the home side with confidence and they looked like getting more, while Cardiff were only creating from peripheral areas.
Devils started to come back towards the end of the first period, but they were fortunate to only be one down.
Mosienko cashed in on a Ben O'Connor move to make it 2-0 at 23;05.
But at the half way point a nice Welsh passing move down the left allowed Tomas Kurka a shot at goal and he halved the deficit.
Andrew Lord equalised but I felt Steelers were harshly treated when the puck hit Mosienko's boot and it directed into the net - the 'goal' was ruled out for a kicking, although he didn't seem to deliberately make contact with his foot.
The fans were hoping the refereeing decision by Tom Darnell won't have a crucial affect on the game,..and the title race.
The 2-2 scoreline set up an explosive third session - but it was one Devils dominated.
Sheffield goalie Marek Pinc certainly won't look at it with any fondness.
He was beaten short-side by Joey Martin at 43;39 and gave up a big rebound for Ryan Russell to make it 2-4.
Mosienko wrapped up his immaculate contribution with a hat-trick consolation with 14 seconds remaining.
*Play-off chasing Coventry, meanwhile, were beaten 2-1 by Belfast courtesy of Mitch Ganzak's late winner.
Elsewhere, Fife made it six victories from their last seven games with a 5-1 triumph over faltering Braehead Clan while Luke Salazar scored a hat-trick as Manchester Storm beat Dundee 7-5 at Altrincham Ice Arena.
Saturday 20th February
Braehead Clan 1 Fife Flyers 5
Coventry Blaze 1 Belfast Giants 2
Manchester Storm 7 Dundee Stars 5
Sheffield Steelers 3 Cardiff Devils 4
Sunday 21st February
Cardiff Devils v Sheffield Steelers – 6.00pm
Dundee Stars v Braehead Clan – 6.30pm
Edinburgh Capitals v Manchester Storm – 5.30pm
Nottingham Panthers – Coventry Blaze – 4.00pm