Just six days after the Blues leaked 44 points and were demolished by Exeter, they responded magnificently to revive their hopes of progressing from Pool Two.
Davies struck two minutes from time following a blistering Cory Allen break, while Wales star Leigh Halfpenny kicked 11 points and Rhys Patchell slotted an early long-range penalty for a gripping 19-15 result.
Jonny Wilkinson booted five penalties for Toulon, yet they were unable to thwart a resilient and committed Blues outfit.
The home side did enough to stay in touch during a game of considerable ebb and flow - it was the first Heineken Cup match played on an artificial surface - before Davies pounced.
The try had its origins in a scintillating break by Blues centre Allen, before Davies skipped past Wilkinson and Maxime Mermoz and grounded possession despite a last-gasp tackle by Toulon scrum-half Frederic Michalak.
Halfpenny added the extras, and there was not enough time left for Toulon to claw their way back, meaning the Blues could celebrate an outstanding victory.
The Blues, anxious to bounce back from their Sandy Park debacle, suffered a late blow when skipper Matthew Rees withdrew because of illness. He was replaced by Marc Breeze, with Wales prop Gethin Jenkins taking over as captain.
Toulon, meanwhile, were again led by Wilkinson as they looked to build on last weekend's bonus point victory over Glasgow and take charge of Pool Two before resuming European battle against Exeter in December.
But the Blues struck an opening blow after just four minutes when Patchell landed a penalty from wide out five metres inside his own half to settle any nerves.
And, with rain falling steadily, it took Toulon time to settle as the Blues harried them in possession and ensured they remained on the back foot.
The visitors stirred after 19 minutes, though, launching a thrilling counter-attack that looked to have resulted in a try for wing Josua Tuisova, but television match official Trevor Fisher ruled an initial forward pass from Tuisova to flanker Steffon Armitage during the build-up.
Toulon drew level through a 21st-minute Wilkinson penalty, before he booted them ahead as conditions deteriorated approaching half-time, meaning both teams found it difficult to string any threatening passages of play together.
The Blues had a late first-half chance to tie things up when Toulon's South African lock Bakkies Botha was penalised for a high hit on home flanker Josh Navidi, but Halfpenny sent his kick wide.
He made no mistake three minutes later, though, and the Blues trooped off level with hopes still intact that they could cause a major upset.
The Blues - and Wales - suffered an injury scare when a limping Alex Cuthbert did not reappear for the second period, while Toulon changed their entire front-row, sending on Xavier Chiocci, Emmanuel Felsina and Carl Hayman.
Wilkinson kicked Toulon ahead when he completed his penalty hat-trick after 45 minutes, and although he missed with another chance three minutes later, he quickly made amends.
The Blues should have cleared their lines defensively, but Patchell threw out a dreadful pass to Halfpenny, who knocked the ball on, and Wilkinson struck after the Blues were penalised from a resulting scrum.
It could easily have signalled a down-turn in the Blues' fortunes, yet they responded strongly and gained a penalty from a scrum that Halfpenny landed to leave the home side just three points adrift.
And he found his range again 11 minutes from the final whistle, this time just inside the touchline after Toulon full-back Delon Armitage was punished for hands in the ruck.
But the lead proved short-lived, with Wilkinson slotting his fifth penalty after Halfpenny was harshly punished for a late challenge on Tuisova, before the Blues staged a stunning finish.