With just 11 laps left, a three-wide battle for the lead involving rookie Jamie McMurray, Rusty Wallace and Busch saw Wallace pass McMurray in the third turn. By the time the battle reached turn 4, however, Busch had pulled in front.
He never looked back and finished 2.294 seconds ahead of Labonte. Wallace was third, followed by Bill Elliott and McMurray.
Dale Earnhardt Jr., who fell one lap down after he left pit road before all the lugnuts were tightened on his front wheel, drove back to the lead lap by lap 216. He ended up sixth.
The race began with pole-sitter Steve Park crashing into the side of Ryan Newman's Dodge Intrepid coming out of the second turn.
Tony Stewart dominated the first half of the race before his engine blew on lap 128. He led by as much as three seconds before the rocker arm in the engine broke, putting the defending Winston Cup champion in the garage area.
The conclusion was NASCAR's best race at the two-mile California Speedway since it opened in 1997, with some competitive three-wide battles for position.
"We didn't lead a lot of laps, but we led when we needed to," Busch said. "I don't know if that was necessarily a secret today. I think we ran up front most of the day and that was a good approach and a good objective that (crew chief) Jimmy Fennig had in mind.
"We put it to the mat and left them. That car felt perfect at the end of the race."
Another Roush Racing driver, Matt Kenseth, remained atop the Winston Cup standings, despite a ninth-place finish. Earnhardt climbed within 44 points of the lead and was followed by Busch and Jimmie Johnson.