The Magpies coughed up eight goals in the first quarter and looked gone for all money when they fell 54 points in arrears early in the third term at Marvel Stadium on Sunday.
But they surged back into the contest as Brownlow Medal fancy Nick Daicos starred, helping the reigning premiers to an 18.11 (119) to 19.4 (118) victory.
Trailing by 31 points at the final change, Collingwood kicked six goals to one in the last quarter, which featured three lead changes in time-on in a thrilling finish.
Norm Smith medallist Bobby Hill took a courageous mark and kicked a go-ahead major at the 27-minute mark - his third of the final term and fifth overall.
But the gripping contest wasn't settled until Zac Fisher's last-gasp snap floated agonisingly wide for North Melbourne.
Bobby Hill kicked five goals and took the new mark-of-the-year favourite in the Magpies' win. (Joel Carrett/AAP PHOTOS)
Fisher's kick drifted narrowly to the right with just three seconds left to play in one of the best games of the season so far.
The result lifted the Magpies (8-4-2) into third spot ahead of their mid-season bye, while North Melbourne (1-12) remain anchored to the foot of the ladder.
"That really was a struggle," Pies coach McRae said.
"There's so many layers to it, with North Melbourne's incredible want and desire and youthful enthusiasm.
"They played right to the level of a team that's not down the bottom."
Controversy erupted in the final minute when North's Bailey Scott marked on the wing but was not paid a 50-metre penalty when Magpies players ran over the mark, seemingly amid confusion over whether the ball travelled far enough.
A 50-metre penalty would have put Scott within scoring distance and given him the chance to kick what could have been a match-winning goal.
Daicos overcame a leg injury during the week and almost missed the match through illness, but starred with 29 disposals, six clearances and two crucial third-quarter goals despite close attention from Will Phillips for three quarters.
Brayden Maynard (L) was a force in defence for Collingwood in his 200th game. (Joel Carrett/AAP PHOTOS)
Jack Crisp (27 touches, six clearances), Steele Sidebottom (23, six) and Josh Daicos (20, four) were also important, while Hill finished with five goals and fellow small forward Lachie Schultz kicked four.
Hill also took a towering mark-of-the-year contender with a huge ride on teammate Billy Frampton and North's Jackson Archer.
Brayden Maynard produced a desperate late spoil to deny Nick Larkey a mark, celebrating his 200th Collingwood appearance in fine style.
Larkey kicked four goals for North Melbourne - all of them in a red-hot first quarter - as new rising star favourite George Wardlaw (30 disposals, six clearances) and Luke Davies-Uniacke (31, seven) shone in the midfield.
Cameron Zurhaar kicked three goals for the Kangaroos, who had a sense of deja vu when they relinquished a huge lead in the final quarter.
Like the previous week against West Coast, they hit the front again when mid-season recruit Brynn Teakle accepted a gift from Larkey in the goal square to mark his club debut with a goal.
But this time they couldn't hold on, with Hill's fifth major ultimately deciding the contest.
North were disappointed but, Alastair Clarkson said, showed they could compete with a top side. (Joel Carrett/AAP PHOTOS)
Not even a ground invader could halt Collingwood's momentum as they surged over the top in the final term.
North coach Alastair Clarkson was left with mixed emotions, proud of his side's ability to mix it with Collingwood but ultimately disappointed in the result.
"We were able to show in different aspects of the game today that we can put it together against a really good side," he said.
"Yeah, we're disappointed that we let such a significant margin get whittled away, but then it's just in the lap of the gods in terms of which side of the post it (Fisher's kick) is going to go to.
"We just couldn't quite get there, unfortunately."
