Newgarden led 170 of the 248 laps on the 1.25-mile oval, en route to his seventh career victory, and Penske's fourth at Gateway and 196th overall.
In front of crowd of about 40,000 fans, Newgarden got by Pagenaud coming out of turn two on the inside on lap 218. The team-mates touched wheels, forcing Pagenaud to back off and settle into third place.
"The move, you know, I don't know what to say," Pagenaud said. "I don't have anything nice to say, so I'm not going to say it."
Newgarden has won three of the last four races, also winning on road and street courses at Toronto and Mid-Ohio during the run. He won the road course in Alabama in April.
"I hope the fans enjoyed it," Newgarden said. "We had an awesome race.
"It was a lot about strategy and fuel-saving, and then a good battle with Simon at the end."
Sebastien Bourdais was 10th in his return from a fractured pelvis and right hip, sustained in an accident in qualifying for the Indianapolis 500.
The first 17 laps were run under yellow, when Tony Kanaan spun out at the exit of turn two and the caution came out before the cars could make an official lap.
Then, when the green flag finally flew, pole-sitter Will Power immediately dropped to third entering turn one, as Newgarden took the lead.
But before Power could make it through turn two, he spun and hit the outside wall, and Ed Carpenter flew in the air and over the top of Power's machine.
Indianapolis 500 winner Takuma Sato also spun in the melee. All three were unable to continue.