Driving a Ford Taurus, Busch became the second driver in the last five years to win this event in consecutive seasons. Short-track specialist Rusty Wallace won in 1999-2000.
"I don't know what it is about Bristol," said Busch, who also became the sixth different winner in as many races this year. "I love this place and I love that I got another win."
Busch has been a runner-up three times this season and has won four times in his last 11 races.
"Kurt Busch is awesome," crew chief Jimmy Fenning said. "He gets up on the wheel and drives the hell out of that race car and he made a call today that won him the race."
Busch, who last week lost by the closest of margins to Ricky Craven at Darlington Raceway, led the final 96 laps and easily held off Roush Racing teammate Matt Kenseth by .390 seconds.
The finish did not have the same drama as last year's race, when Busch knocked veteran Jimmy Spencer out of his way en route to his first career victory.
Busch averaged 76.185 miles per hour around the .533-mile oval and earned $157,790. Kenseth is 138 points ahead of Busch in the Winston Cup standings.
"Our car was really good at times, but on that last restart, I was a little looser than I would have liked," Labonte said. "I thought before that caution came out that we were gaining on Kurt really good there. Then the caution came out. After the restart, we weren't as good. Matt got by us there."
Sterling Marlin was the highest Dodge Intrepid finisher as only the top six cars finished in the lead lap.
"We had some good pit stops and some good calls," Marlin said. "We had a good car on the long run. We just didn't have enough laps at the end. I wish we had ended up in the top five, but we managed to stay on the lead lap and hopefully this sixth-place finish will give us a little momentum going into Texas."
Spencer and Jeff Gordon dominated the race, but the outcome was decided by a late caution that stranded several contenders on pit road. Gordon finished ninth and Spencer 12th.
The 500-lap race had 17 cautions for a staggering 120 laps. It was three cautions short of the race record, but only one was serious.
"You watch all these wrecks and the cars as they go by and you keep praying you are on the right side when the smoke clears," Busch said. "For the most part, we were."
Due to the number of accidents, green-flag runs were kept rather short. There were 11 runs of less than 15 laps.
The most notable accident took place with 75 laps to go when Kyle Petty bounced off Ward Burton's Dodge and hit the wall hard in turn 1. Petty was carefully helped out of the car and later was taken by ambulance to Bristol Medical Center for precautionary reasons. He was alert and responsive.
"He took a hard lick," said Petty's crew chief, Steven Lane. "I think that when he came to, he said he could get out on his own. He'll be OK."
Dale Jarrett also hit the wall with just five cars on the lead lap and 109 laps to run. Busch, Labonte, Rudd, Biffle and Marlin all made pit stops.
"We actually cut that closer than you think," Busch said. "I was told to pit two laps before and I saw debris in turn 2. I took it upon myself to stay out on the race track. Sometimes it takes that gut instinct behind the wheel to know when to stay out."
Busch grabbed the lead from Labonte with 96 laps remaining and avoided any mistakes during three more yellow flags. Kenseth made up a lap during the middle caution to get himself into contention, but not enough to take the win.
While running fourth, Jerry Nadeau made contact with the lapped car of pole-sitter Ryan Newman and was knocked out on lap 456. Nadeau raced to Newman's pit and gestured angrily at crew chief Matt Borland before other members intervened.
Defending Winston Cup champion Tony Stewart also was unhappy with Rudd when they bumped midway through the race. Both drivers attempted to avoid Jamie McMurray's stalled car and ran into each other. While continuing around the track, Stewart forced his Chevrolet on Rudd's tail in a continuous bump.
Eventually, Stewart was involved in the final caution when he suffered serious damage. Race officials black-flagged him when he could not maintain minimum speed after repairs, and he finished 26th.