The reigning champions looked in full control with four tries on the board and a 30-0 lead when Highlanders flyhalf Lima Sopoaga dropped a goal in the 54th minute.
The error-prone Waratahs had looked a shadow of the side that won the title under Michael Cheika in 2014 but his replacement as coach Daryl Gibson emptied his bench and reaped the dividends.
Replacement number eight Jed Holloway got the first two tries, debutant prop Tom Robertson added another and when Holloway crossed in a driving maul for his hat-trick nine minutes from time, it was a four-point match.
The Waratahs were unable to breach the Highlanders' line again, however, and tries from winger Ryan Tongia, number eight Liam Squire, two from flanker Elliot Dixon and 10 points from Sopoaga's boot proved enough for the Highlanders to win.
The Waratahs, who had been hoping to gain a measure of revenge for their playoff semi-final defeat at the hands of the New Zealanders last year, were simply wretched in the first half.
A succession of handling errors snuffed out their best chances and handed possession back to the rampant Highlanders but it was the missed tackle count that did most harm to their cause.
In the 11th minute, centre Rob Thompson stepped through the tackle of Waratahs hooker Tolu Latu in midfield before offloading to Tongia, who was able to stroll over the line.
Eighteen minutes later and Squires seized on another Waratahs error and charged straight through the sky blue defensive line, shrugging off a series of tackles for a converted try that made it 17-0.
Dixon's first try came from a Ben Smith kick through to the line and his second just after the break from a Sopoaga crosskick that he caught on the wing above a couple of defenders.
The Waratahs' tries were all from close range but the 18,351 crowd would not have minded the aesthetics if the hosts had managed to pull off the comeback. – Reuters
Original source: Highlanders hold off gritty Waratahs