Leinster regained top spot in the Magners League from Edinburgh on Sunday after eking out a 29-20 win in Cardiff.
The Blues, who had won five in a row in all competitions, had an abundance of possession despite their troubles in the tight, but lacked the penetration to turn their attractive rugby into scores.
They now face serious problems in next season's Heineken Cup, with the Scarlets now just two points behind them with a game in hand in the battle for the third Welsh slot.
At first, it seemed the Blues were determined to emulate the national team, throwing the ball around only to concede points.
Lost possession in midfield allowed Leinster fly-half Shaun Berne to send Isa Nacewa up the wing and although the Irish were kept at bay, they recycled the ball and McFadden took an excellent angle to cross beneath the posts.
The centre added the conversion, followed by a penalty after the Blues had once again spilled the ball in their eagerness to play expansive rugby.
The home side finally got it right and prop Gary Powell - later to leave on a stretcher with an Achilles injury - squeezed in at the corner, but another McFadden penalty kept Leinster in front.
With the normally reliable Ben Blair off key in his attempts at the posts, the Blues opted to kick for position and it paid off when flanker Sam Warburton, released from Wales duty, dived over and Blair finally succeeded with the conversion.
McFadden struck another penalty with the last kick before the break, but the Blues began the second half with a sparkling attack which saw left wing Chris Czekaj make it to the flag and the Welshmen were in front.
Their lead did not last. A superb break by Eoin O'Malley took Leinster into the Blues' 22 and the centre found tireless hooker Bernard Jackman on his shoulder for a try which gave McFadden a simple conversion.
The Blues then lost fly-half Ceri Sweeney to the sin-bin for what was harshly ruled to be a spear tackle on opposite number Berne, but the home side managed to survive the 10 minutes without leaking any further points.
But Berne then dropped a goal which extended Leinster's lead and robbed the Blues of a losing bonus point.
They seemed to have retrieved it when Sweeney kicked a late penalty after Leinster lock Devin Toner was yellow-carded for a deliberate knock-on, only for that man McFadden to step up and slot over a penalty from halfway with the final kick of the game.
Tries: Powell, Warburton, Czekaj
Tries: McFadden, Jackman
Cons: McFadden 2
Pens: McFadden 4
Drop goal: Berne
Cardiff Blues: 15 Ben Blair, 14 Tom James, 13 Casey Laulala, 12 Tom Shanklin, 11 Chris Czekaj, 10 Ceri Sweeney, 9 Gareth Cooper, 8 Xavier Rush, 7 Sam Warburton, 6 Maama Molitika, 5 Paul Tito (capt), 4 Scott Morgan, 3 Gary Powell, 2 T Rhys Thomas, 1 Taufa'ao Filise.
Replacements: 16 Huw Dowden, 17 Scott Andrews, 18 Andries Pretorius, 19 Andy Powell, 20 Lloyd Williams, 21 Sam Norton-Knight, 22 Dafydd Hewitt.
Leinster: 15 Girvan Dempsey, 14 Andrew Conway, 13 Eoin O'Malley, 12 Fergus McFadden, 11 Isa Nacewa, 10 Shaun Berne, 9 Eoin Reddan, 8 Stephen Keogh, 7 Shane Jennings (capt), 6 Kevin McLaughlin, 5 Malcolm O'Kelly, 4 Devin Toner, 3 CJ van der Linde, 2 Bernard Jackman, 1 Stan Wright.
Replacements: 16 Richardt Strauss, 17 Mike Ross, 18 Trevor Hogan, 19 Rhys Ruddock, 20 Paul O'Donohoe, 21 Ian Madigan, 22 Simon Keogh.
Referee: Andy Macpherson (SRU)
Assistant Referees: Leighton Hodges (WRU), Phil Connett (WRU)
TMO: Hugh Watkins (WRU)