Substitute Marvin Williams bagged a massive injury-time winner as Millwall moved to within two points of the safety zone.
The Lions had taken a 33rd-minute lead with a fine finish from Ben May.
But Dave Tuttle's men were caught out within two minutes of the restart when Chris Coyne levelled with a thumping close-range shot.
Millwall lost their composure alarmingly and suffered a severe attack of second-half nerves as Luton grabbed a hold on the game.
It had looked as if the visitors, rather than home side, were the more likely to go on and secure maximum points.
To make matters worse, Paul Robinson was incredibly booked by Uriah Rennie for sitting down on the pitch whilst waiting for the officials to allow physio Colin Clifford onto the field for treatment. Robbo subsequently hobbled off to be replaced by Lloyd Dyer with eight minutes remaining.
Luton's response was to send on towering duo Enoch Showunmi and Dean Morgan to try and capitalise on a re-shuffled Lions rearguard and snatch a late winner.
But it was Millwall who, somehow snatched victory in dramatic circumstances. Matt Lawrence's long raking ball was flicked on by Carl Asaba, and there was Williams who appeared from nowhere to poke the ball home and send the home crowd wild.
In a scrappy game boss Tutts handed new signing Colin Cameron his debut less than 24 hours after joining on loan from Wolves.
Asaba also made his first start at The Den since 29th November, but it was strike partner May who tested Luton keeper Marlon Beresford first, with a stinging freekick on 10 minutes that produced a flying save. Although Beresford could only parry the ball at full-stretch he was able to block Asaba's follow-up shot and required treatment after injurying himself in the process.
May was not to be denied after 33 minutes though, juggling the ball before swivelling and despatching a low shot past Beresford.
Incredibly this was the first time this season that The Lions had gone in at home a goal to the good - but sadly within two minutes of the second half Coyne capitalised on some woeful marking to thump home the leveller.
Sensing Millwall's despair, and with the home team at times appearing in total disarray, Luton pushed forward in a bid to add further goals against the ragged Lions.
Andy Marshall twice came to the rescue with important saves to deny the lively Carlos Edwards and Steve Howard as The Hatters piled on the pressure.
Debutant Cameron - who played a full 90 minutes for Wolves reserves on Thursday night - and the disappointing Alan Dunne were replaced on 70 minutes by Williams and Barry Cogan.
The latter combined well with Asaba on 75 minutes to set up Dave Livermore, but his drilled effort flew a foot wide of the mark.
But with Luton threatening to nick victory, Lady Luck for once, thankfully, finally smiled on The Lions - and super sub Williams wore the biggest smile of all with his dramatic injury-time winner giving renewed hope that Championship safety can be secured.

Millwall: Marshall, Lawrence, Craig, Elliott, Robinson (Dyer, 83mins), Whitbread, Livermore, Cameron (Cogan, 70mins), Dunne (Williams, 70mins), Asaba, May. Subs not used: Doyle, Braniff.
Bookings: May (45mins), Robinson (82mins), Williams (88mins), Whitbread (90mins)
Scorers: May (33mins), Williams (90mins)

Luton Town: Beresford, Foley, Heikkenin, Coyne, Edwards, Nicholls, Underwood, Holmes (Showunmi, 85mins), Brkovic (Morgan, 85mins), Howard, Vine (Feeney, 72mins). Subs not used: Brill, Barnett.
Booking: Vine (25mins)
Scorer: Coyne (47mins)

Ref: Uriah Rennie
Att: 9,871 (Away 1,181)