Fullback Charles Piutau was dangerous as the Blues enjoyed early territorial advantage. However it was the Crusaders who opened the scoring through a Dan Carter penalty in the fourth minute.
The Blues had the opportunity to equalise a minute later but halfback Piri Weepu's penalty attempt bounced off the posts.
A huge miss pass from Te Aute College product Weepu saw in-form blindside flanker Steven Luatua score the first try of the game in the 11th minute. Weepu missed the conversion attempt.
Carter put the Crusaders back in front with a 24th minute penalty. A minute later, the Blues were back in front courtesy of a handy Weepu penalty.
The hosts scored their second try in the 29th minute when winger, former New Zealand sevens star Frank Halai, crashed over in the corner which should have been better protected by All Black and Magpies fullback Dagg.
Lindisfarne College product Dagg's nightmare continued when Halai scored his second try four minutes later following a clever chip from first five-eighth Chris Noakes, which Halai fielded and dived over in Dagg's tackle. Weepu converted and the Blues led 20-6.
Two Carter penalties in the final three minutes of the half had the Crusaders trailing 20-12 at the interval.
The Crusaders opened the scoring in the second half with a Carter penalty in the 43rd minute.
Blues openside flanker Luke Braid, who had visited the bloodbin regularly, scored the bonus point try in the 59th minute. Noakes converted and the hosts led 27-15.
It appeared Dagg may have sparked a late Crusaders comeback in the 71st minute when he scored in the tackle of rampant Blues centre Rene Ranger. However, the television match official ruled Dagg didn't release the ball in an earlier tackle by Ranger and the try was disallowed.
The Blues scored their fifth try when winger George Moala finished off a spectacular breakout from the hosts. Replacement back Baden Kerr landed the conversion and the Blues had maximum points from two matches.
Blues captain and lock Ali Williams said the victory was another step in the team's quest to regain respect after a dismal 2012. He was impressed by his troops' defence and desire.
Crusaders captain and No8 Kieran Read said his team didn't show up in their first outing of the season after having the bye the previous week.
"Our ball retention wasn't good. We had our chances but didn't finish them off."
Hawke's Bay age group product Dominic Bird made his debut as a substitute lock for the Crusaders and the Central Hawke's Bay College product did nothing wrong. New Magpies openside flanker Brendon O'Connor made the most of his minutes for the Blues while Braid was in the bloodbin.
Scorers: Blues 34 (Frank Halai 2, Steven Luatua, Luke Braid, George Moala tries; Piri Weepu, Chris Noakes, Baden Kerr cons; Weepu pen) Crusaders 15 (Dan Careter 5 pens). HT: 20-12.