Three ahead overnight, the 51-year-old closed with a 69 on the hilly Pete Dye Course at French Lick to finish on eight-under-par, recording an impressive four-shot victory.
Mexican Esteban Toledo twice got within a stroke of the Scot before Montgomerie delivered a telling thrust as he picked up five birdies in eight holes around the turn.
It was the second year in a row that Montgomerie managed to come out on top in this event after playing in the last round with his former Ryder Cup team-mate, Bernhard Langer.
Following his breakthrough over-50s win at Harbor Shores in Michigan 12 months ago, Montgomerie added the US Senior Open a few weeks later and will defend that title in Sacramento at the end of June.
“I’m just making up for lost time,” he said after becoming the first player since Jack Nicklaus to secure major titles for his first three wins on the Champions Tour.
“I spent 22 years trying to do this (win majors) and three have come at the one time. I’m having a fantastic time as I’m having fun out here.”
On his performance, the winner added: “If there was a difference, it was patience, I suppose. It was a difficult course and that played into my hands.”
Montgomerie’s overnight advantage was reduced immediately after he started with a bogey and that would normally have been a door he’d preferred not to have opened for Langer, the reigning Senior Open champion.
However, his closest challenger at the start soon dropped out of the reckoning with an uncharacteristic double-bogey at the second then taking bogeys at the fourth and eighth.
Instead, Toledo emerged as the Scot’s chief threat as he covered the first seven holes in three-under to twice get within a shot of the lead. On both occasions, though, Montgomerie matched his birdies, holing from seven feet and four feet respectively at the fifth and seventh.
His lead increased to three shots after splashing out to 15 feet from a bunker at the front of the par-5 ninth then seeing his putt topple into the hole as he turned in 34 to sit on seven-under.
Now firing on all cylinders after that early setback, the former Ryder Cup captain made it four birdies in six holes following a fine approach into the tenth, giving him a four-shot cushion with eight to play.
As putts that had been dropping earlier for Toledo started to stay out, Montgomerie went further in front when he managed to get up and down from an awkward spot below the level of the green at the par-5 12th.
And, though he found heavy rough with a pushed drive at the 15th, limiting the damage there to a bogey still left him with a nice cushion and, indeed, he bounced back with a birdie at the par-5 16th.
A bogey at the last after flying the green with the approach was a rare dropped shot of the tournament on a treacherous course.
“Monty did an outstanding job today,” admitted runner-up Toledo, who closed with a 69 to finish a shot ahead of third-placed Woody Austin. “To shoot four or five-under is incredible.”
Sandy Lyle, the other Scot to make the cut from a four-strong starting contingent, finished in joint-ninth after he closed with a 74 for a two-over-par total.