Victory should have left Allianz Stadium on Saturday with three points after a masterful first-half free-kick from Juan Mata.
Charles Nduka added a second in the 70th minute to put Artur Diles' side in the box seat.
But Victory collapsed in the final 20 minutes with mid-season recruits Apostolos Stamatelopoulos and Ahmet Arslan salvaging a draw for Sydney.
"We needed to stand up there and once we've conceded, the next five minutes are really crucial," said Diles.
"That's something we'll look at but in the end we gave them that momentum and belief.
"We're a good side and we need to be better in those moments."
The Sky Blues lost ground in their bid for a top-two finish by failing to win but are undefeated in their last four games.
Ufuk Talay's third-placed side are two points adrift of Auckland, who could increase that buffer with a win over Perth on Sunday.
"We missed some good chances and I think the positive side of it is that 'Stama' got his goal, which is great," said Talay.
"Hopefully that opens the gates for him and Ahmet got a goal as well.
"The new boys that have come in are starting to grow with the team and that's very important."
Victory, meanwhile, will be kicking themselves that they failed to turn the screw when they were on top following some Mata magic in the 33rd minute.
Nikos Vergos had a handful of chances for Victory before Pierro Quispe gave away a brain-dead foul close to the edge of the Sydney box.
Mata made Sydney pay by floating a perfectly-weighted shot over the wall and beyond the reach of Harrison Devenish-Meares.
The 37-year-old Spaniard - discarded by bottom-placed Western Sydney Wanderers after last season - now has four goals and 10 assists that have strengthened Victory's hopes of a finals finish.
Victory led 1-0 at halftime courtesy of Mata's strike and looked poised to return to Victoria with a valuable win when Nduka tucked home.
But Sydney refused to roll over and grabbed two goals in as many minutes to claim a draw.
Stamatelopoulos grabbed his first Sydney goal when he headed in Ben Garuccio's pinpoint cross.
Two minutes later, Arslan got on the end of a Al Hassan Toure delivery for his goal.
Sydney had the upper hand in the final quarter of an hour but Victory held firm.
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