The fly-half pulled the strings in the Reds' 35-21 win on Anzac Day at a soaked Suncorp Stadium.
While denied a bonus point on Friday thanks to a late Blues try, the victory still snapped the Reds' two-game losing streak and left them entrenched in the top four at 6-3.
But the Blues (3-7), dominant in their march to the title last year, slipped to ninth and have work to do with just four regular season games to play.
Lynagh shot out of the blocks with tries in the fourth and seventh minutes to claim the inaugural Sellars Dixon Medal for player of the match and again push his case for the Wallabies' No.10 spot against the British & Irish Lions later this year.
He put his head through a gap from close-range for the opener and then, off a Jock Campbell break, ignored his inside support to step the fullback and notch an early double.
The 22-year-old then teamed with Tate McDermott and Tim Ryan to hold up rampaging hooker Kurt Eklund.
Ryan was involved twice more in try-savers to frustrate the visitors.
"He's not afraid to take it on and today he took some good options," Reds coach Les Kiss said of Lynagh.
"There was a big step up … the boys ran it beautifully in defence. They're a hard team to hold back when they get a bit of momentum on
"We didn't win every battle but we won enough of the important ones."
McDermott noted that the return of Campbell at fullback had complemented Lynagh's game.
"Just composed ... not once was he worried and that's really important from someone the boys hear from a lot," he said of his halves partner.
Blues coach Vern Cotter's headache grew when winger Mark Tele'a was yellow-carded for a spectacular tipping tackle that dumped Ryan on his head.
The card was upgraded to red soon after but it was the Blues who dominated territory and should have scored more than the one try by half time.
The Reds battled for fluency of their own and it was as if McDermott had had enough when he skipped out of the ruck and through three Chiefs forwards to slide next to the post for a relieving solo try.
They scored twice more to seal the win despite a late Blues try, the visitors capping a night of frustration when Corey Evans fumbled in the in-goal to miss a try that would have instead gifted them a crucial bonus point.
All Blacks centre Rieko Ioane was well held by 20-year-old Reds product Dre Pakeho, Cotter pulling no punches after another sorry night.
"It's a fact ... we're a better team than that and those are the conversations we're having at the moment," he said of the quiet performances of his many stars.
"We're easily satisfied, don't have that same hunger (as last season).
"I just want to see the team fight a bit.
"I don't mind going down, but going down when we don't give the best of ourselves is always a bit difficult to accept."
