Casey, who also won here in 2001, won for the sixth time in his European Tour career and second time this season. He led after 54 holes for the ninth time in his career and won for the third time in those nine events.
'This feels fantastic. I think more so because I had a couple of great players chasing me out there,' stated Casey. 'To play with Colin (Montgomerie) in Scotland on a Sunday is always a treat and for it to be at Gleneagles in the final round and final pairing is very, very special.
'It is satisfying. I've played great golf for a long time now and to battle through today for a win was tremendous.'
Andrew Marshall (69) and Soren Hansen (70) got within one of Casey, but never could gain a tie for the lead at any point during the final round. They ended at minus-15.
Montgomerie, who had another close call last week at the U.S. Open, faltered to an even-par 73 Sunday to share fourth place at 14-under-par 278. He was joined there by his two-time Ryder Cup teammate Thomas Bjorn (71). Alastair Forsyth was a shot back at minus-13 on the PGA Centenary Course at The Gleneagles Hotel.
Casey got off to a flying start and looked to put things away early, but he struggled with his putter -- 34 putts on Sunday -- to let others back into the mix. He opened with a birdie on the first and when Montgomerie bogeyed the same hole, Casey's lead was three.
The Englishman two-putted for birdie on the par-5 second, then knocked his approach inside 2 feet at the third. Casey kicked that in for birdie to move four clear of the field at minus-18.
Casey missed the fairway left at the fourth and that led to his first bogey of the day. After three straight pars, Casey had just a pitching wedge for his second shot at the eighth. The 28-year-old found the green with that shot, but three-putted for the first time all week. The bogey dropped him to 16 under, but he was still three clear of the field.
Casey atoned for that error with a two-putt birdie on the par-5 ninth. He gave that stroke right back with a bogey at the 10th. Casey again two-putted for birdie on a par-5, the 12th.
He was two ahead of Monty at the time. Casey missed short and right of the green at 15. He was unable to get up and down for par and that bogeyed dropped Casey's lead to one stroke over Hansen and Marshall.
Casey parred his final three holes to hang on for his first win since the Volvo China Open in November.
'It was a hell of a start. There was a different wind today, especially for holes like three. It played tremendously easy down wind,' Casey said. 'That was what made it difficult down the stretch. Although I had a nice start, it was never a big enough lead to really switch to cruise control. I got the job done in the end though.'
Marshall opened with a birdie on two, but gave that stroke right back as he bogeyed the third. He eagled the ninth, but still trailed by four strokes. Marshall birdied the 12th for the fourth straight round, then birdied 15 to get to 15 under. He also parred the final three holes to end one back.
Hansen was not a factor most of the day as he bogeyed the first, but came back with a birdie on two. He parred the next 11 holes to remain at 12 under. Hansen made some noise down the stretch with birdies on 14, 16 and 18 to finish at minus-15.
Montgomerie was 1-over through 10 holes with two bogeys and a birdie. The Scotsman poured in back-to-back birdies from the 11th to him within two of Casey at 15 under. Monty then wrapped bogeys at 15 and 17 around a birdie on 16 to slide to even par for his round. He parred the last to end two back.
Fredrik Henge (68) and Brett Rumford (73) shared seventh place at 12-under-par 280. Kenneth Ferrie and Robert Karlsson were one stroke further back at minus-11.