Larrazabal, who had to play two qualifying rounds, finished at 15-under 269.
It was, for me, a six-day tournament, he said.
Montgomerie shot a 68 for a 273, one stroke in front of Soren Hansen of Denmark. Australias Richard Green (67) was next at 276, one shot ahead of Lee Westwood of England and Markus Brier of Austria.
I played great golf, Larrazabal said. Today and yesterday was probably the best golf of my life. Now I know I can play like those guys'Montgomerie and Westwood.
Larrazabal, whose parents came to France to watch the tournament, was thrown into a lake by friends after his victory.
Maybe its the way to do it, he said. Bring my family with me all the time.
The Spaniard persevered on the last four holes. After a bogey on the 14th, he sank birdie putts from 10 and 25 feet on the 15th and 16th to lead by five strokes.
Pablo has a great future ahead of him, Montgomerie said. He bogeys the par-5 14 and then he birdies 15 and 16. Good luck to him because these flags were no gimmes.
Montgomerie missed opportunities on the last seven holes but made a long birdie putt on the last hole to secure second place.
Larrazabal hit into the trap at the ninth hole after an approach shot found the rough. He then missed the green and had to chip for a double bogey. That cut his lead to two strokes as Westwood birdied the 10th. But he bounced back after the turn with two straight birdies to regain a four-shot advantage over Montgomerie.
I felt the pressure a little bit when I lost my concentration at the ninth, Larrazabal said.