Stephen Hunt's superb late strike, coupled with a Spurs win over Birmingham, ensured Wolves avoided relegation from the Premier League as both they and Blackburn survived on an afternoon of high drama at Molineux.
Hunt curled home from 18 yards in the closing stages, a goal that in the end proved the difference between relegation to the Championship and extending Wolves' stay in the top flight.
Blackburn, who themselves went into the game at risk of the drop, sealed their place in next season's Premier League thanks largely to a fabulous first-half performance, as they swept into a 3-0 lead courtesy of goals from Jason Roberts, Brett Emerton and Junior Hoilett.
Wolves hit back in the second half with goals from Jamie O'Hara and Hunt, before the full-time whistle sparked jubilation around Molineux.
At various stages in the second half Wolves were in and out of the bottom three, but even after O'Hara pulled one back from a clever free-kick they were still going down, needing to score to move above Birmingham on goal difference as Blues were drawing 1-1 at White Hart Lane.
With the home fans chanting "We only need one goal", Hunt provided the salvation the capacity Molineux crowd were so desperate for, collecting the ball on the right-hand side of the penalty area and wonderfully arcing the ball into the corner beyond Paul Robinson's despairing dive in the 87th minute.
When Spurs scored late in stoppage time against Birmingham to earn victory, it secured Wolves' status - and with the game in injury time both sets of supporters were singing songs of survival in the West Midlands sunshine.
It was a quite remarkable afternoon that lurched from joy to despair and back again several times over, as both teams did enough to stay up and managers Mick McCarthy and Steve Kean were mobbed by their playing and coaching staff on the final whistle.
Their celebrations were eventually shared, yet how differently they went about retaining their Premier League status.
Blackburn's first-half performance, in the circumstances, was quite remarkable. They played with an attacking fluency missing from large swathes of their season, with strikers Roberts and Hoilett proving unplayable for the Wolves defence.
Time after time the visitors soaked up pressure from the hosts, won the ball back and then hit them on the break, with Steven Nzonzi and Jermaine Jones both providing superb support from midfield with some excellently timed runs.
If home advantage was supposed to help Wolves, it quickly proved more of a hindrance as Rovers settled quicker, their pacey forays forward in sharp contrast to the laboured way Wolves moved the ball around.
Every time Blackburn advanced into the Wolves box there was danger, as Roberts headed at Wayne Hennessey, Hoilett's near-post cross forced the keeper to gather low down and then Jones dragged an effort off target.
The nervous tension clearly felt by the Wolves players soon spread to the terraces, and after Chris Samba proved his worth to Kean's side with a superb block to deny Stephen Ward, the visitors got the goal their impressive start deserved.
It was a personal nightmare for Michael Mancienne, the defender dallying on the ball and giving away possession. When it was cut back to Michel Salgado inside the Wolves box, his driven effort was deflected in by the ever-alert Roberts.
Wolves continued to enjoy the greater share of the ball but they looked lifeless and impotent in the final third as Samba and the superb Phil Jones marshalled the Blackburn backline and, before too long, Rovers doubled their lead.
A long punt into the Wolves box was not dealt with by the home team - despite three players attempting to clear - and when it fell to Emerton 20 yards out, the Australian hit the sweetest of right-foot volleys to hammer the ball into the corner of Hennessey's net, giving the Welsh keeper no chance.
The worse it got on the pitch the worse it got elsewhere, and news of a Blackpool leveller at Manchester United had Wolves' fans in agony, a state not helped when Hoilett sneaked into their area down the left and had a shot deflected inches wide of the far post.
Wolves' efforts were summed up by Jody Craddock's wild attempt from the edge of the Blackburn box, but just as Mick McCarthy was preparing his half-time team-talk, Rovers extended their lead even further.
Another ball into the Wolves penalty area caused confusion, and when Hoilett picked it up he superbly drove past a defender before smashing the ball into the bottom corner, running away jubilantly to celebrate with the Blackburn fans who must have felt they were in dreamland.
At the break, as it stood, Wolves were heading for the Championship and McCarthy responded by sending on striker Sylvan Ebanks-Blake for Mancienne, the substitute immediately helping set up a chance that Hunt headed wide before Ebanks-Blake drilled high and wide from 20 yards.
As news filtered through that Spurs were beating Birmingham 1-0 there were cheers from the Wolves fans, but they almost went 4-0 down when Hennessey saved brilliantly from Hoilett after a slip from Kevin Foley.
It was O'Hara who got them back on course, peeling away from the Blackburn defence to convert a clever free-kick routine 15 yards out, before it emerged that Birmingham had levelled at Spurs and Wigan, another in the relegation mix, were winning at Stoke.
The fans knew that if everything elsewhere stayed the same Wolves only needed one goal to survive and after a hush had descended on Molineux, they told the players the scenario, seemingly revitalising McCarthy's men.
It was left to Hunt to step up to the plate, his season-defining strike sending the black-and-gold stands into delirium and ensuring Wolves, as well as Blackburn, would be playing Premier League football in August.