First-half goals from Tamas Priskin and Gareth McAuley gave Town a third successive win.
Hungary international Priskin took his goal tally for the season to five with a close range finish on six minutes.
The Blades levelled through Stephen Quinn - brother of Blues' midfielder Alan - just before the half hour but McAuley won it for Town, reacting quickest in the box to smash a half volley into the net on 40 minutes.
Town made one change from the side that beat Millwall last week, skipper David Norris forced out with an ankle injury. Jake Livermore coming in.
Just like the win over the Lions, Town struck early - Priskin forcing the ball in from six yards after Jack Colback had set him in with a header.
Damien Delaney sent a header over from a Grant Leadbitter corner as Town started on the front foot, Priskin then rattling the post with a left foot effort.
Sheffield were close to grabbing an equaliser on 20 minutes, Jamie Ward's trickery took him away from McAuley and from his cross, Richard Cresswell's header was cleared off the line by Delaney, Mark Yeates blasting the rebound past the post.
The Blades were level though eight minutes later, Quinn beating Marton Fulop after Leadbitter had given away possession.
Tom Eastman cleared from Yeates as Gary Speed's side enjoyed their best spell of the first-half but Town continued to carry a threat, Priskin and Jason Scotland almost linking up inside the Sheffield box.
It was Blues who went in at half-time ahead, McAuley challenged for a header from Leadbitter's cross and reacted quickest to send a half volley past Steve Simonsen and into the net for his second goal of the season
Ched Evans replaced Ward at the break, Town then making an early change in the second-half, Connor Wickham on for Scotland and the England U19 international immediately created an opening for Colback on the edge of the box but the Sunderland loanee failed to hit the target.
Fulop pushed Kyle Bartley's 20 yard effort on to the post while at the other end McAuley was close to adding to his first-half goal with a header from Colback's corner, Simonsen making the save.
Evans fired wide before Blues made a second change with Jaime Peters on for the last 20 minutes, Priskin making way.
Daniel Bogdanovic replaced Johnny Ertl as the Blades went three at the back as they searched for an equaliser, the former Barnsley striker testing Fulop with a near post effort within seconds of coming on.
Eastman was replaced by Troy Brown for the last five minutes, the teenage defender appearing to take a knock and being forced off.
Edwards, who picked up a yellow card after being judged to have been timewasting at a throw, fed Peters inside the box but the Canada international couldn't find the target.
Delaney picked up a yellow card after a foul on the edge of the box on Evans, Bartley following for dissent - perhaps protesting that the Irishman deserved a red.
Quinn sent the resultant free-kick over the bar, via a deflection with Bogdanovic heading the corner over.
Fulop joined the yellow card brigade for delaying his goalkick, the Hungarian international then called into action to deny Evans inside the Town box with the Blades' last crack at goal.
Nick Mongomery became the fifth player to be booked by referee Graham Salisbury in the last 10 minutes of the game as Sheffield grew in frustration with Town holding on for a first win over the Blades in six years.
Sheff Utd: Simonsen, Lowton, Ertl (Bogdanovic 79), Bartley, Nosworthy, Yeates, Britton, Montgomery, Quinn, Cresswell, Ward (Evans 46). Subs not used: Parrino, Calve, Kozluk, Wright, Taylor. Booked: Bartley, Montgomery.
Town: Fulop, Eastman (Brown 85), McAuley, Delaney, Smith, Edwards, Leadbitter, Livermore, Colback, Scotland (Wickham 56), Priskin (Peters 70). Subs not used: Hyam, Murray, Townsend, Murphy. Booked: Edwards, Delaney, Fulop.