The Boks came from behind to snatch the lead with seven minutes remaining when Jacque Fourie powered his way through Mike Phillips and Tommy Bowe. Steyn's touchline conversion put the world champions 25-22 in front but the Lions fought back with Stephen Jones's fifth penalty to level the game with just two minutes remaining.
A draw would have been better than a defeat but the Lions were denied that when Ronan O'Gara made contact with Fourie du Preez in the air after the Irishman put a kick up in the air. Steyn never looked like missing from 54 metres out to break the Lions hearts.
The Lions had proved a totally different proposition to the side which lost the first Test last weekend. Their scrum was bolstered by Adam Jones and Matthew Rees who along with Gethin Jenkins dominated their opposite numbers.
The Lions led 16-8 at the break and were well worth the lead. However in the second half they were unable to continue their domination and suffered a double setback when both props had to leave the field at the same time, which led to uncontested scrums. To add insult to injury, both centres Jamie Roberts and Brian O'Driscoll had to leave the field within minutes of each other as the physical nature of the game began to take its toll.
The Springboks had a lucky escape in the third minute when star flanker Schalk Burger was given a yellow card by French referee Christophe Berdos for 'fingers in the eye' of Luke Fitzgerald. The law book says the offence carries a red card.
However the Lions made the extra man count and took the game to the Boks.
First Jones sent over the penalty and after breaks from Tommy Bowe and Rob Kearney had softened up the men in green, the Irish full back roared home out wide. Jones's conversion made the score 10-0.
Out of nowhere the Springboks hit back. Juan Smith grabbed a line-out ball at the back and found Fourie du Preez. The scrum-half fed JP Pietersen who come in on a sublime line.
The Lions increased their lead with another finely judged Jones penalty. In a week the Lions had managed to turn their weakness - the scrum - into a strength with the all Welsh front row of Adam Jones, Matthew Rees and Gethin Jenkins out muscling their opposite numbers.
The Lions pack shoved the Boks eight off their own ball when the home side were sniffing a push over try from five metres. Within seconds the Lions were down the other end to set up Jones for a drop goal, which he booted over emphatically.
The Lions were firmly in control throughout the first half but needlessly gave away a penalty right on the hooter, and even though it was 60m out, Francois Steyn banged over the penalty to give the Lions a 16-8 lead at the interval.
Jones increased the led to 11 points with another well struck penalty but the game began to turn when winger Bryan Habana cut open the Lions defence which mirrored the move from when Pietersen scored. With Steyn adding the conversion the Lions lead had suddenly been slashed to just point points.
The game could have still gone either way when Steyn and Jones traded penalties but then the match turned decisively in the Boks favour when Fourie scored in the corner.
Lions fans thought the men in red had done enough to earn a draw when Jones showed nerves of steel to add his fifth penalty but Steyn had other ideas when he delivered the decisive blow with the last kick of the match.
Scorers: South Africa: Tries: Pietersen, Habana, Fourie; Cons: Pienaar, M. Steyn; Pens: M.Steyn (2), F.Steyn
Lions: Try: Kearney; Con: Jones; Pens: Jones (5); Dgl: Jones