Kennaugh took the victory on stage one, and successfully defended the race lead until the UCI 2.HC-ranked event's finale on Sunday.
The Manxman finished the race one minute and three seconds ahead of Janier Moreno (Movistar) overall, with Damiano Caruso (Connondale) in third at 1-42.
Marco Haller (Katusha) took the final stage win ahead of Astana's Jacopo Guarnieri and Garmin-Sharp's Raymond Kreder.
It's Kennaugh's second stage race win this season after he won the Settimana Coppi e Bartali in March. He was forced to miss the Giro d'Italia due to illness, but came back to win the British road race national title at the end of June.
Kennaugh's form in Austria raises the question as to why he was passed over for Sky's line-up in the Tour de France. Whatever the reason, a win in the tough race has significantly bolstered his growing list of victories.
Tour of Austria 2014
Final overall classification
1. Peter Kennaugh (GBr) Sky in 29-45-40
2. Javier Moreno Bazan (Spa) Movistar at 1-03
3. Damiano Caruso (Ita) Cannondale at 1-42
4. Patrick Konrad (Aut) Gourmetfein Simplon Wels at 2-50
5. Riccardo Zoidl (Aut) Trek Factory Racing at 2-52
6. Jerome Coppel (Fra) Cofidis at 3-03
7. Oliver Zaugg (Swi) Tinkoff-Saxo at 3-07
8. Jure Golcer (Slo) Gourmetfein Simplon Wels at 3-47
9. Dayer Quintana (Col) Movistar Team at 4-14
10. Thomas Degand (Bel) Wanty–Groupe Gobert at 4-15
We keep track of British riders' victories in international professional races during the 2014 season
Thank you for reading 20 articles this month* Join now for unlimited access
Enjoy your first month for just £1 / $1 / €1
*Read 5 free articles per month without a subscription
Join now for unlimited access
Try first month for just £1 / $1 / €1