The Portuguese stopper - preferred to the returning Carlo Cudicini, who was on the bench - dived low to his left to keep out Danny Webber's 17th-minute penalty before Lampard took over.Lampard's long-range 43rd-minute free-kick caught out Blades keeper Paddy Kenny to give the visitors the lead, then his cross enabled Michael Ballack to head home number two five minutes after the break.
• Spot-kick call wrong - Mourinho
But the scoreline did scant justice to the performance of Neil Warnock's men, for whom defender Claude Davis, their own record signing at a mere £2.5million, was outstanding.
The Blades enjoyed swathes of first-half possession and restricted the visitors - who left out £30million man Andriy Shevchenko - to half-chances prior to Lampard's opener.
Had Webber not let the pressure of a packed home crowd get the better of him as he delivered a weak spot-kick to Hilario's left, it might have been a different afternoon entirely for Jose Mourinho's men.
Nick Montgomery and Alan Quinn had both got forward with plenty of purpose before Didier Drogba was forced back to nip Quinn's 16th-minute cross off the toes of Davis in the box.
One minute later Drogba and Davis tangled again and referee Martin Atkinson pointed to the spot, only for Webber - the only man to keep his place from the midweek Carling Cup loss to Birmingham - to miss.
It looked likely the Blades would pay for blowing their chance, but they responded in positive fashion, Quinn shooting just over the bar and Rob Hulse edged out by John Terry chasing a Webber cross.
Chelsea's best early shout had come from a penalty appeal of their own, when Paulo Ferreira cut into the box and fell theatrically under the challenge of Davis.
Davis was also on hand to block an Arjen Robben cross and Ballack had a half-chance squeezed around his own post by Chris Armstrong, before Lampard began to make his match-winning contribution.
The England midfielder saw a point-blank header brilliantly saved by Kenny - but one minute later counted his luck from a long free-kick which bounced horribly over Kenny into the net.
Shorn of the in-form Drogba at the interval, Mourinho's men grabbed the crucial second in the 50th minute when Lampard found space on the left and crossed for Ballack to head home from point-blank range.
It was harsh on the Blades, but as Bramall Lane quietened the champions sought to press home their advantage, Lampard firing over from long-range and then just wide from a Bridge cross.
Kenny came to the home side's rescue with a brave save at the feet of Robben in the 54th minute as the visitors belatedly began to show their quality.
Gillespie tried to bring the home side back into it with a fizzing effort which flashed inches over the bar, only for referee Atkinson to change his mind and blow for an earlier free-kick infringement.
That momentary controversy galvanised the home side again, with tackles beginning to fly in and Montgomery booked for hacking down the flying Kalou on Chelsea's left wing.
But Ballack came close to grabbing his second with a 65th minute snap-shot from close to the penalty spot which flashed inches over Kenny's bar.
United continued to have their moments, mostly through the impressive Quinn on the left, and his fine 72nd minute cross fell to Hulse who headed over in front of goal.
Spot-kick call wrong - MourinhoAfter the match Chelsea boss Jose Mourinho was bitter about the penalty awarded against his side despite a 2-0 win at Sheffield United.
'The decision for me was completely wrong,' he said.
'The referee has a wrong decision but after that the performance it is good to think there was one mistake, that's it. When the performance is so poor you are not so happy.
'It was a big decision against Chelsea at the beginning of the game. If Hilario doesn't save it maybe we are in trouble.
'It was not easy for us but the team fought well. We deserved the victory and could have scored more goals.'
Opposite number Neil Warnock also griped about Martin Atkinson's decision-making especially the free-kick which led to Lampard's opener.
'Goals change games and it really would have been nice for once to put a penalty away and put a bit of pressure on them, take the lead and see how they reacted. Unfortunately it was not to be and a goalkeeping error resulted in the first goal.
'I don't understand the advantage rule. It seems to be one rule for one and one for the other.
'I'm disappointed with the result but it augurs well. I think we've got a fighting chance (of staying up).'
Lampard paid tribute to Hilario after his penalty save, which followed a foul on Claude Davis by Didier Drogba.
'We've got to give a lot of credit to Hilario in goal who has been fantastic in his few games, and made a great save. He's had a few clean sheets since he came in and he's been brilliant,' Lampard said.
Lampard opened the scoring before half-time, with a free-kick which arrowed past the home side's wall and deceived goalkeeper Paddy Kenny.
He added: 'Job done. It was a winner. It was a difficult game, they were pumped up and ready to have a go at us.
'We started the game well and when they got the penalty, even though they missed it, it gave them a lift and they had a go at us. We weren't at our best in the first half but got the job done.'
Asked about his free-kick, which Kenny might have saved had he not dived early, Lampard said: 'I tried to hit it and hopefully make it move about. If you hit the target you've got a chance.
'I tried to get some power and movement and fortunately enough it went in.'
Ballack's goal - he also netted last week in the win against Portsmouth - came from a Lampard cross.
'It was a perfect ball,' said the German. 'I'm good with my head so I thank Frank for the good assist.
'It was not easy but 2-0 was important for us.'
Sheffield United 0 - 2 Chelsea
