The Proteas were put into bat first and scrambled their way to 174-8 from their 20 overs thanks in large to AB de Villiers, who made 46 and JJ Smuts, who made 45.
Tom Curran was the pick of the England bowlers on the day as he finished with figures of 3-33 from his four overs on his international debut which promises much for the future.
In reply, it looked like England were coasting to victory but brilliant death bowling from Chris Morris and Andile Phehlukwayo saw the Proteas get over the line despite Jason Roy making 67 from 45 balls.
It means that the series is right in the balance going into the final game with all to play for which is exciting for both teams and their sets of fans.
South Africa made a strong start after being put in to bat first
On yet another beautiful summer's day, Eoin Morgan won the toss for England they decided to bowl first on what looked a belter of a pitch at Taunton.
The Proteas showed that early on and despite the early loss of Reeza Hendricks for seven off the bowling off Curran, they reached the end of the powerplay on 45-1.
They showed no signs of stopping their aggressive batting though and that lead to the downfall of Mangaliso Mosehle with Liam Plunkett removing him for 15 from 12 balls.
De Villiers and Behardien's big hitting got the Proteas to 174 from their 20 overs
Smuts and De Villiers though came together at the fall off the second wicket and the pair really started to put the foot down until Liam Dawson removed Smuts for 45 from 35 balls to leave the score on 96-3.
Plunkett then removed David Miller cheaply soon after for eight but with De Villiers still at the crease the Proteas still had real hope of a big score.
Just as De Villiers started to really get into overdrive, David Willey removed him after the Proteas skipper made 46 from 20 balls.
Late hitting from Farhaan Berhardien, who made 32 from 21 balls saw the Proteas make 174-8 from their 20 overs despite Curran removing Morris for 12 and Phehlukwayo for a first ball duck.
Roy and Bairstow got England off to a great start despite the early wicket of Billings
In reply, England got off to a brilliant start in their run chase despite losing Sam Billings for three off the bowling of Morris as they got to 51-1 after the powerplay.
Jonny Bairstow once again showed what good form he was in for the hosts and alongside Roy, the pair put on a fantastic partnership off 110 with Roy passing his half-century in the partnership.
The partnership was finally broken by Morris as he removed Bairstow for 47 from 37 balls and from their the England innings slowed right down with the score on 125-2.
Bizarre cirumstances changed the game in South Africa's favour
Roy was the key wicket that the Proteas wanted and they got it in bizarre circumstances when he was given out for obstructing the field on 67 which really angered the England fans and players.
The Protea players now had their tails up and they got another wicket when Phehlukwayo removed the dangerous Jos Buttler for 10 which gave them a real chance in the game.
It got even better for the visitors when Dane Paterson removed Morgan for 6 to leave the hosts needing 12 runs to win from the final over of the game.
Phehlukwayo defended 12 runs from the final over to seal victory for the visitors
Liam Livingstone, who was making his debut for the hosts, was run out for 16 with two balls remaining meaning that England needed eight to win from the final two deliveries.
Dawson managed to hit the penultimate ball for a boundary but Phehlukwayo managed to bowl a dot ball with the final ball of the innings to seal an incredible victory for the Proteas from nowhere to level the series with one game remaining.