Toulon took control of Pool 6 as they left Cardiff Blues' Heineken Cup hopes hanging by a thread.
After throwing away a 15-point lead to lose their Heineken Cup opener at Sale last week, Blues needed a win at home to stay in contention.
The Welsh side struck early when Leigh Halfpenny went over and the full-back also kicked three penalties.
But Jonny Wilkinson's boot kept Toulon in contention before Steffon Armitage's close-range try broke Welsh hearts.
Toulon - who had seen off French rivals Montpellier in their opener - started fiercely at the Arms Park, with centre Mathieu Bastareaud in particular scattering Blues defenders in his wake.
But the French big-spenders were hit with a sucker-punch as Blues launched a skilful counter from a scrum in their own 22.
Scrum-half Lloyd Williams gave the ball width and Halfpenny hit the line, exchanging passes with wing Tom James before outpacing David Smith to the line.
The Wales full-back was just wide with the conversion of his own try, however, and two Wilkinson penalties soon after saw Toulon nose in front.
Blues were still finding space on the wings to work with when they managed to get their hands on the ball, with Alex Cuthbert looking dangerous on the right.
The home side lost tight-head Benoit Bourrust to injury early, forcing Blues to bring Welsh youngster Scott Andrews on and face his former Blues team-mate Gethin Jenkins in the Toulon number one shirt.
Blues soon lost another stricken player as centre Gavin Evans suffered a sickening contact with Toulon full-back Delon Armitage.
The crowd howled for Armitage to be sent off but replays showed clearly that Evans had slipped going into the tackle and the blow to the head was accidental, although referee George Clancy still awarded a penalty despite keeping his cards in his pocket.
Fortunately Evans had recovered sufficiently by the second half to emerge onto the sidelines and watch his team-mate's efforts.
Dafydd Hewitt came off the bench to help midfield partner Jamie Roberts' attempts to stifle the bludgeoning Bastareaud and the more rapier darts of former Wallaby Matt Giteau.
Despite Toulon's glut of possession Blues' first-up tackling, led by their back-row, had been impressive throughout to keep the French side in check and Halfpenny had the last word in the first half as the full-back stroked over a kick for a slender 8-6 lead.
Two Wilkinson penalties edged Toulon back into the lead soon after the restart but Halfpenny thumped a kick between the posts to narrow Toulon's lead to 12-11.
With 15 minutes remaining Toulon struck a crucial blow to finally put daylight between the sides, as forwards and backs combined to send Giteau arcing for the line.
Halfpenny chopped down the Australian just short, but Steffon Armitage was on hand to barge over for a converted try.
Blues suffered another blow when Warburton was forced off with his nose streaming blood and the disparity in resources between the two sides was underlined as Toulon coach Bernard Laporte sent on props Carl Hayman and Andrew Sheridan, two of the most destructive scrummagers in world rugby.
Yet Andrews and Tafa'ao Filise rose to their task magnificently and from a scrum earned a penalty that Halfpenny gleefully converted to give Blues a sniff of victory.
But from the restart Blues undid their good work by coughing up another penalty and Wilkinson restored Toulon's two-score advantage to seal the win.
View from the changing room
Blues coach Phil Davies: "There's a lot of pride and a lot of frustration because for 80 minutes we stuck in there and performed superbly well.
"We gave ourselves a platform to potentially win the game, and but for a bit of inaccuracy and field position we could have beaten one of the strongest squads in Europe.
"That would have been a huge plus for our young group. But we gave away a couple of cheap penalties and that was a bit frustrating."
Cardiff Blues: Leigh Halfpenny; Alex Cuthbert, Gavin Evans, Jamie Roberts, Tom James; Ceri Sweeney, Lloyd Williams; Tafa'ao Filise, Marc Breeze, Benoit Bourrust, Bradley Davies, Lou Reed, Josh Navidi, Sam Warburton, Andries Pretorius (capt).
Replacements: Andi Kyriacou, Nathan Trevett, Scott Andrews (for Bourrust, 20), James Down (for Davies, BB 29-40; for Reed, 59), Robin Copeland (for Warburton, 67), Lewis Jones (for Williams, 69), Jason Tovey (for Sweeney, 59), Dafydd Hewitt (for Evans, 25).
Toulon: Delon Armitage; Vincent Martin, Mathieu Bastareaud, Matt Giteau, David Smith; Jonny Wilkinson, Frederic Michalak; Gethin Jenkins, Mickael Ivaldi, Davit Kubriashvili, Bakkies Botha, Jocelino Suta, Juan Fernandez Lobbe, Steffon Armitage, Chris Masoe.
Replacements: Jean-Charles Orioli (for Ivaldi, 41), Andrew Sheridan (for Jenkins, 59), Carl Hayman (for Kubriashvili, 51), Pierrick Gunther (for Fernandez Lobbe, 59), Maxime Mermoz, Benjamin Lapeyre, Nicolas Durand, Simon Shaw (for Botha, 59).
Referee: George Clancy (Ireland).