In front of a full house at Perth Arena, the Australians fell short, prolonging the wait for a first local victory in the competition since 1974. "We just wanted to take this little revenge for ourselves".
Mladenovic failed to close out the match on serve in the 10th game of the deciding set before dominating world No.1 Barty in the tiebreak to produce arguably the best victory of her career. With just Sam Stosur's 2011 US Open title and Barty's breakout French Open title in June the only Grand Slam singles wins since Evonne Goolagong Cawley in 1980, Australia's return to the Fed Cup world stage has seen fans flooding back.
Earlier, No. 51-ranked Ajla Tomljanovic rebounded from a dispiriting performance in her Australian Fed Cup debut on Saturday against Mladenovic to record a 6-4, 7-5 victory over Pauline Parmentier in one hour and 33 minutes.
The teams entered day two locked at 1-1 after Barty crushed Caroline Garcia 6-0 6-0 on Saturday.
Two quick errors brought Mladenovic back to deuce in the eighth game, and then a brilliant cross-court forehand from Barty set up set-point. She produced a herculean effort on the outdoor hard court after earlier Sunday upsetting the top-ranked Barty in a three-set thriller to move France into a 2-1 lead.
At this juncture, Barty's forehand miscues were increasing in frequency, while Mladenovic was finding flawless backhand passes, leading to the Frenchwoman's first break of service to lead 5-4.
Barty took control of the match early and broke serve in the second game.
Stung, Barty rallied for 3-3 but the errors again crept in and the set ultimately went to a tense tie breaker where Mladenovic triumphed.
Mladenovic came out to serve for the match, but the adrenaline pushed her swinging volley long for 0-15. "I was really in the zone", she said. She needed one, levelling at 5-5.
Tomljanovic only hit the scoreboard in the fourth game when Mladenovic struggled on serve and double-faulted twice.
The set went to a tie-break.
The Frenchwoman then hooked a forehand victor to break for 3-1, and a Barty error made things harder for Australia, as the French fans chanted "Kiki!".
"I think that's probably the best tennis match I've ever played in my life", an elated Barty said.
"We kept on fighting every single point".
The French stunned many when they played world no. 122 Parmentier ahead of world number 60 Alize Cornet and teammate Caroline Garcia, who both watched on from the sidelines.
Australia have now lost the last nine Fed Cup finals they have played in.
Now the pressure was on her to keep Australia's hopes alive.
"Certainly from a complete point of view and having a complete game [it was the best]", Barty said following the match.
The experience of the French player told, as she broke straight back and then held for 4-4.
But captain Alica Molik kept faith with her and she bounced back to beat Parmentier 6-4, 7-5.