Busch, who has eight Cup wins, was just ahead of Edwards when they pitted under caution on lap 180 of the 200-lap 3M Performance 400, but Edwards beat the 23-year-old star out of the pits.
David Ragan and June Michigan winner Dale Earnhardt Jr. had stayed on track and were running 1-2, but Edwards easily passed them on the restart on lap 183 to retake the lead, then held off Busch on another restart with two laps to go and gave Roush Fenway Racing co-owner Jack Roush his 20th overall victory on the 2-mile Michigan oval.
Edwards, who turned 29 on Friday, also won the Nationwide Series race Saturday, becoming only the second driver to win both races. Former Roush driver Mark Martin did it in 1993.
"The key was my crew today," Edwards said. "My guys did an unbelievable job getting me off pit road.
"This is unbelievable. We're winning races. We're gearing up for the Chase. I'm feeling stronger than ever. We're here to win championships. That's what we're shooting for."
With just three races left until the start of the Chase for the championship, Edwards moved a little closer to Busch in the seeding process, which gives drivers making the 10-race postseason a 10-point bonus for each victory. Edwards lost one of those 10-point bonuses to a penalty early in the season, but would still be just 40 points behind Busch if the Chase began next week.
"That's a part of it," Edwards said. "Ten points is 10 points. The beauty of it is keeping Kyle from getting 10 points. He's so fast you can't give him any room."
Edwards was pulling away at the end, building a lead of nearly 1.5 seconds before Denny Hamlin's blown engine brought out the seventh and final caution flag of the day on lap 195 of the 200-lap event. That moved Busch's Toyota right up to the rear bumper of Edwards' Ford as the green flag waved for the final time for the start of lap 199, but it wasn't close as Edwards pulled out to a 15 car-length victory.
"(This was) very important," said Bob Osborne, Edwards' crew chief. "What we're doing here is a little bit of practicing for the Chase and trying to get those 10 points to catch that 18 car. ... Carl Edwards did a great job. The pit crew did a great job."
"It just came down to when he beat us off of pit road," Busch said. "That was it for us. We just didn't quite have the car capable enough of being able to beat those guys. We were good on that one run, that one set of tires. But that was pretty much what we had.
"We just didn't have enough for the (No.) 99 there at the end. We weren't able to get through the corners as fast as Carl was."
Asked about the championship, Busch said, "Carl's right there. He has been all year. Yeah, it's a 20-point swing. We've got to live with it. Hopefully, we can make it up someplace else."
Ragan held on to finish third, followed by Roush Fenway teammates Greg Biffle and Matt Kenseth, who bounced off the wall passing Martin, now driving a Chevrolet for Dale Earnhardt Inc., on the last lap.
"We were a nine out of a 10 it seems like and those other guys were a 10 out of a 10," Ragan said. "Just to gamble a little bit (on staying on track) we knew at worst that we would still finish in the top five. It was something to take a shot. We certainly learned from it. If we had to do it all over again, we'd probably still do it again."
Earnhardt Jr., who appeared to have one of the strongest cars in the early going, bounced off the wall in heavy traffic moments after being passed by Edwards on the late restart. He pitted and wound up finishing 23rd.
Earnhardt held onto fourth place in the standings, but several other drivers took a big hit in the race for the Chase. Kasey Kahne, who finished 40th with an engine failure, fell to 11th and Hamlin, who wound up 39th, dropped to 12th, the final spot in the Chase, just 26 points ahead of both Clint Bowyer and Ragan, tied for 13th.
Two-time reigning Cup champion Jimmie Johnson and Hendrick Motorsports teammate Jeff Gordon, a four-time series champion, also had a tough day.
The two were involved in a three-wide bumping incident with two-time Cup champion Tony Stewart. Johnson had to pit immediately with a cut tire, lost a lap and wound up 17th after spinning through the grass on the final lap. The damage to Gordon's car from the bump showed up a few laps later when he cut a tire and hit the wall, sending him to the garage for repairs. He finished 42nd.
Johnson remained third in the standings, but Gordon fell from sixth to ninth, 82 points in front of Bowyer and Ragan.