The Crusaders, who hammered the Auckland Blues 59-12 two weeks ago then had the bye last week, often begin to show their title credentials at the business end of the season and now head into the international break comfortably placed for their final three matches of the season.
They moved to 51 points on the points table, two behind the table-topping Waikato Chiefs, who play the Blues at North Harbour Stadium on Saturday.
"We knew this was a really important game for us," fly-half Daniel Carter said in a pitchside interview.
"The Highlanders were sitting just behind us on the table and it was a must-win, so very pleased with the boys."
The match had been billed as a final trial before the All Blacks squad for Tests against Ireland is named on Sunday, though national coach Steve Hansen said earlier on Friday he had settled on the 30-man squad, barring any injuries.
After an early George Whitelock try and Carter penalty had given the Crusaders a 10-0 lead, referee Steve Walsh changed the momentum of the match, twice, with yellow cards.
Walsh sent Whitelock to the sinbin for an indiscretion at the breakdown, which allowed Otago fly-half Chris Noakes to slot his second penalty and then centre Tamati Ellison to bust over for a try that Noakes converted and gave the visitors a 13-10 lead.
Just before Whitelock returned to the field, however, England international James Haskell was sinbinned for a similar offence at the breakdown and the Crusaders struck.
Carter slotted the penalty then Zac Guildford scored two tries following two clever stab kicks by Carter before inside centre Ryan Crotty finished off a sweeping movement that capped the 22-point burst while Haskell was off the field and gave the home side an unassailable 32-13 lead at the break.
All Blacks captain Richie McCaw grabbed a controversial fifth try with Walsh missing a possible forward pass and knock on, before prop Wyatt Crockett and replacement flanker Matt Todd barrelled over as the home side hammered home their domination.
Even the Highlanders' second half try came as a result of the Crusaders' dominance, when All Blacks winger Hosea Gear intercepted an Andy Ellis pass inside his own 22 and sprinted away.
Had Gear not intercepted, three Crusaders were lining up outside Ellis with the tryline open.
"Hats off to the red and black team, they were on fire," Highlanders captain Jame Mackintosh said.
"They know how to turn it on at the right point of the season and tonight they were (very) classy."