Watson was revisiting the scene of one of his Open triumphs
FINAL ROUND LEADERBOARD:
Level T Watson (US)
+1 S Ginn (Aus), M O'Meara (US)
+4 J Haas, L Nielsen, L Roberts (all US), E Romero (Arg)
Tom Watson survived a double bogey at the last to win his third Senior British Open title by a single stroke.
Watson's final round of 73 saw him finish the tournament on level par, one shot ahead of third round leader Stewart Ginn and Mark O'Meara.
Four more players tied for fourth place a further three shots behind.
Three birdies allowed Watson to drop shots at the 10th, 14th and last holes and win again at Muirfield, where he won The Open in 1980.
Sam Torrance and Gordon Brand both fired final rounds of 76 to finish joint 10th on seven over.
Nick Faldo hit a second successive round of 75 to finish a further shot off the pace, in joint 14th place.
Overnight, Watson trailed Ginn by one shot, and the Australian was his nearest rival all day,
But Watson said the pendulum swung his way at the short par-four 11th.
"Making birdie there and Stewart making bogey turned the tide and gave me a little cushion," he said.