Local favourite Villeneuve was safety ahead after the last of a succession of caution flags late in the NASCAR Nationwide series race on Saturday.
Then he was bumped and passed by Allgaier on the final lap of the 2.7-mile road course named after his late father, Gilles Villeneuve.
In a race extended from 74 to 81 laps due to frequent restarts, Allgair took the checkered flag just ahead of Sam Hornish Jr., with a steaming Villeneuve dropped to third.
"I got run into," said Villeneuve, a native of Iberville, Que., who came close twice before to winning the Montreal race only to meet with misfortune near the end. "Into Turn 6, I think it was Allgaier who hit me really hard and that was it, which is very frustrating because our car was untouchable."
He felt the hit was intentional, but it was not ruled illegal by race stewards.
Allgaier claimed his third title in 130 career races in Nationwide, which is one step below NASCAR's top Sprint Cup series. It was his first win of the year.
The American said the bump was accidental, but that justice won out in the end.
Allgaier's teammate on the Turner Motorsports team for the weekend was veteran Alex Tagliani of Lachenaie, Que., who was in the lead on the 67th lap when he was nosed into a spin by the hard-charging Villeneuve. Tagliani ended up 22nd.
"I don't know if (Villeneuve) went into protect mode or if he was running out of gas, but he went really slow and I had too much of a head of steam," said Allgaier. "I'm sure he's not happy about that, but I know the No. 30 car (Tagliani) had the lead and he was taken out by that car (Villeneuve's). So I guess what goes around, comes around."
Tagliani was just as harsh toward Villeneuve, who has not made many friends in NASCAR with his aggressive driving.
"I thought I was in position to win a race on home soil but he wanted to win so bad that he forgot about manners, respect, how to drive on a racetrack and how to pass," said Tagliani, who was taking a one-race break from the IndyCar circuit.
"It's too bad because he's losing his reputation more and more as his career advances."
A race that has become known for crashes and wild endings lived up to its billing in its sixth edition, which was run in near-perfect racing conditions.
The crowd estimated at 60,000 saw Danica Patrick hold the lead for more than 20 laps before running into a succession of car problems. And Villeneuve there to take over through one restart after another as cars banged either into each other or into the concrete walls around the tight track.
Allgaier's team came prepared for mayhem, and opted to keep his car well-fuelled in case the race went longer than scheduled.
"The race played out perfectly," he said, after nudging Hornish and Villeneuve, who were Penske teammates for the race, off the top step of the podium.
Nationwide series leader Elliott Sadler was fourth and veteran Ron Fellows of Toronto, who has at times helped Allgaier learn the ins and out of road racing, was fifth.
Villeneuve has not won a race in any series since he took the Formula One title in 1997, and has not won at Circuit Gilles Villeneuve since he was a hot prospect in the Formula Atlantic series in 1993.
The 41-year-old has not had a steady ride in recent years, but picks up work in NASCAR for its few road races each year.
A subplot to this race was the lingering animosity between Patrick and Villeneuve. The last time they were in the same race at Road America in June, Villeneuve bumped her off the track while she was trying to equal her NASCAR-best fourth place.
But Patrick's run of recent bad luck continued. The sport's best-known female driver developed steering, suspension and gearbox problems that finally forced a long stay in the garage. She returned to the track, but was six laps behind the field.
Villeneuve passed into second place on Lap 32 to set up a head-to-head duel with Patrick, who had run over a shoe apparently thrown on the track by a fan. But Dexter Stacey of Kahnawake, Que., hit a wall and brought out the pace car again. Earlier Stacey had nearly backed into Villeneuve after a spinout.
After that restart, Patrick's steering wheel went loose and Villeneuve squeezed past her on the 40th.
Patrick told her pit crew "something's almost ready to break," but they left the decision to her and she managed to stay out until she ran over a curb, causing another caution at Lap 45. After repairs, she rejoined in 30th spot, tried to battle back but then lost her gearbox.
After more cautions, Tagliani crept back into the lead on the 63rd, only to be pushed off by Villeneuve.
"He was really slow, just blocking on the inside, and the guys behind me were catching up," said Villeneuve. "We tangled a bit.
"I thought it would be all right so I didn't get off the gas. I didn't want to cars behind me to get to me. I ended up turning him around. That's a shame. That wasn't my intention. At that point I couldn't stay behind him."
Sadler now leads the series by 22 points over Ricky Stenhouse Jr., who was 12th.
Fellows, the 2008 champion, ran near the front most of the day, but his chances were compromised when he was bumped off the track by Kyle Busch on Lap 67. Andrew Ranger of Roxton Pond, Que., retired after 58 laps.
It was a rough day for Patrick Carpentier of Joliette, Que., who came out of retirement for the race. He retired nine laps in after a pit stop with brake trouble that wasn't able to be repaired.Suggest a correction