The NSW Waratahs are ruing the one that got away after crashing back to earth with a crushing 23-21 Super Rugby Pacific loss to the Highlanders in Sydney.

Last-start hero Tane Edmed cursed himself after missing a 39-metre penalty-goal attempt, from just left of the posts, after the siren that would have won the game for the Waratahs at Allianz Stadium.

Edmed had slotted seven from seven in NSW's shock 37-24 round-two win over the defending champion Crusaders, before landing another four goals on Friday night.

But he couldn't deliver under pressure, leaving the Waratahs -- in their own words -- "back to square one" after failing to back up the huge win in Melbourne.

"It's always tough on Tane, those ones, but, we were definitely in a chance to win that one," said Waratahs captain Jake Gordon.

Manly NRL coach Anthony Seibold was a conspicuous presence in the NSW box witnessing the drama unfold.

Seibold would have been impressed by the Waratahs' courage to fight back from 10-0 down early, but disappointed with the side's execution in the heat of battle.

NSW found themselves somewhat unluckily trailing through an early opportunistic -- and converted -- try to Highlanders centre Rhys Patchell and two penalty goals from five-eighth Sam Gilbert.

But strike weapons Mark Nawaqanitawase and Izaia Perese and in-form playmaker Tane Edmed thrust the hosts back in to the contest in the crucial 10 minutes before half-time.

First, Perese and Nawaqanitawase combined brilliantly for the Tahs' opening try on the half hour.

Perese released Nawaqanitawase down his right wing with a clever flick pass, then he backed up to pounce on the Sydney Roosters-bound Wallabies utility's pinpoint in-field kick to score NSW"s only try of the first half.

Edmed slotted a penalty goal after the half-time siren to earn the Tahs their 16-13 lead at the break.

Alas, after Gilbert drew the home side level in the 57th minute, powerhouse winger Tanielu Tele'a bumped off Waratahs pair Triston Reilly and Joey Walton to put the Highlanders in front.

Reilly redeemed with the break and key pass for Max Jorgensen's 67th-minute try to put the Waratahs back in front.

Edmed's subsequent miss will likely haunt him -- and no doubt send a message to new Wallabies coach Joe Schmidt, who is on the hunt for a cool playmaker capable of delivering when the heat is on in 2024.

The Waratahs had been striving to win back-to-back games against NZ opposition for the first time since 2015, the year after they won their first -- and still only -- Super Rugby crown.

"I still think at points of the game we look sharp tonight," Gordon said.

"Second half, we couldn't build any phases, apart from that try and we turned over ball too easily.

"Just, when it counted, we weren't sharp."