Lizzie Armitstead won the women’s title for a third time with a breakaway victory before Kennaugh prevailed in the men’s race.
Cavendish, the 2013 winner in Glasgow, was one of the key protagonists for the 200.5-kilometres race, which featured nine ascents of the steep Michaelgate climb to the finish between Lincoln Cathedral and the castle.
On paper the uphill finish and having three Team Sky riders in competition counted against Cavendish, the 25-times Tour de France stage winner who proved he is far more than a sprinter.
But the Etixx - Quick-Step rider broke away with Kennaugh, only for the defending champion to claim victory on the final climb.
Sky’s Ian Stannard was third ahead of team-mate Luke Rowe.
Kennaugh is the first rider to successfully defend the British men’s title since Roger Hammond in 2003 and 2004. The 26-year-old, who is hoping to be named in the Team Sky squad for the Tour which is to be announced today, said on britishcycling.org.uk: “I think that’s got to be one of the hardest races of my career.
“From three kilometres in, when we split it in the crosswinds, it was on all day, you were constantly on the pedals without realising.
“I’m over the moon just to stay in white with my white bike and all my white accessories. It means a lot to me.” Kennaugh paid tribute to Cavendish. “I think it goes to show he’s not all about being a sprinter and getting dropped off at 200 metres to go,” he added.
“He’s as strong as anybody else so hats off to Cav and I’m sure he’ll have the jersey again another year.”
Cavendish said: “I’m super happy, happy with my form, happy with a medal here.”
Armitstead dominated the women’s race despite a crash at the Aviva Women’s Tour ten days ago which saw her career flash before her.
The Commonwealth Games champion and Olympic silver medallist was pipped to victory by Laura Trott 12 months ago in Abergavenny, but showed her intent by attacking on the penultimate ascent of Michaelgate.
The 26-year-old from Otley prevailed over 103.5km ahead of mountain bike specialist Alice Barnes, with two-time Olympic track champion Trott third.
“It means I get to be proud of being British in all the races that I do,” Armistead said of being able to wear the British champion’s jersey.
“It means a lot – it means new kit for a start. I go to the Giro on Friday so it will be a quick turnaound for then.
“I had some good people around me before the start who told me to believe in myself and I listened.
“It was a difficult race. The longer the race went on the better I started to feel.
“The nationals is always such a hard race to control. I had it stacked against me today with some strong girls all working against me, so I’m just pleased to pull it off.”
Trott added: “Lizzie was in a league of her own – she attacked and that was it. Literally nobody could follow.
“She was just unbelievable – she literally just floated up the hill and just left the rest of us for dead.”