Sterne closed with a 4-under 65, but wasn't assured the victory until third-round leader and local favorite Bradley Dredge lipped out a par putt on the final hole.
Sterne finished off his second tour title at 13-under-par 262.
Dredge's closing bogey dropped him to minus-12 after a 2-under 67, where he shared second place with Soren Kjeldsen (65), Mads Vibe-Hastrup (66) and Mardan Mamat (62).
The leaderboard throughout the final round was tight with as many as eight different players holding a piece of the lead at different points.
Sterne seemed to fall out of contention early as he bogeyed two of the first four holes to slide to minus-7, four strokes behind the leaders.
The South African bounced back with a birdie on the fifth, but gave that stroke right back with a bogey on the sixth at Celtic Manor's Roman Road Course.
'I didn't get off to a great start at all and I was worried in the beginning,' Sterne admitted. 'I said to my caddie on seven, 'if I can make six birdies coming in, I've got a chance.''
Sterne birdied the seventh for the first time this week to get back to minus-8. Around the turn, a birdie at the 10th got Sterne back to even-par for his round.
'I was quite surprised with the start because I was swinging so well on the range this morning,' said Sterne. 'I didn't expect that and thought I had a good chance today. I made a good putt on seven, then made five more birdies coming in.'
The 25-year-old ran off three straight birdie putts from the 14th, two of which were from over 25 feet out, to move to 12 under and into a share of the lead with Mamat, Kjeldsen and Vibe-Hastrup.
Sterne needed one more birdie in the last two holes to break the logjam atop the leaderboard. He got up and down for par on 17, but saved his best for last. Sterne knocked his approach to six feet at the last and made the difficult birdie putt to move one clear of the field.
'I played the last five holes like it was match play, I was three down with five to go,' Sterne stated. 'I'm a pretty good match player. I knew if I could make three birdies I'd have a good chance.'
Dredge, who was looking to become the first Welsh winner in the event's eight- year history, also got off to a rough start with bogeys one and four. He didn't start getting back into the mix until he birdied nine and 10 to get back to 10 under.
The Welshman birdied three in a row from the 15th grab a piece of the lead. At the last, Dredge hit his drive into a fairway bunker and came up well short of the green with his second.
Dredge pitched to six feet, but his par putt lipped out giving Sterne the title.
'I thought I had carried the bunker at the last there and I thought I needed par to win,' Dredge said. 'I hit a good pitch, but missed the putt and that was it.'
Mamat, who played 12 groups ahead of Dredge and was done more than an hour before the Welshman, was the first into the clubhouse at 12 under.
He dropped a shot on the first, but birdied five of the next six holes to jump to 9-under. Mamat caught fire again late on the back nine with three birdies in a row from the 15th to get in at 12 under.
Kjeldsen dropped a shot early, but five birdies in an 11-hole stretch moved him to 12 under and into a share of the lead. He ended one back as he could only par the final two holes.
Vibe-Hastrup posted two birdies on the front nine to get to 11 under. Around the turn, he birdied the 16th to gain a share of the lead. Vibe-Hastrup played the 16th at 5 under for the week. However, he parred the last two to share second despite a bogey-free round.
Mikko Ilonen (63) and Gary Murphy (66) tied for sixth place at 11-under-par 265. Alejandro Canizares, Paul Broadhurst, Gary Orr, Tom Whitehouse, Nick Dougherty and David Frost were one stroke back at minus-10.