Croudis (17) was in seventh place after the first round but, with 74 in the second round, was within two shots of the lead.
The Balmacewen golfer started his final round with three birdies to share the lead with Priestley and the final round became a two-horse race as the other contenders fell away.
Croudis missed the green on the par-3 seventh and made a bogey to return to 1-under for the tournament.
He shared the lead at the turn and Croudis bogeyed the 11th and made a birdie three at the 13th to remain tied for the lead.
Croudis parred in while Priestley dropped a shot on the 16th to trail by one.
Croudis had a 3m putt for a birdie four on the final green but it lipped out giving Priestley a chance of a tie with a birdie.
But Priestley three-putted to give Croudis a winning margin of two.
"By far it's my best win," Croudis said.
"Coming from Dunedin I don't get the same opportunities as players in the North Island and when I come to events like this, there's more pressure to do well.
"I came with no real expectations this week. I've played solid. I didn't make many birdies but I didn't make many bogeys either. The key has been that I have not made many mistakes."
Croudis also took the gold medal for Otago Boys High School in the intercollegiate section of the tournament.
The win puts Croudis in contention for the New Zealand under-19 team which will compete in the Aaron Baddeley Invitation tournament in China in December.
Croudis is the first Otago golfer to win this event, with Ben Gallie finishing in second place in 1995.
Croudis will now be the favourite to defend his title when the event is held at Balmacewen in Dunedin next year.
Aucklander Cecilia Cho (14) won the girls under-19 title, adding another trophy to her growing collection after winning the New Zealand amateur and South Island championships earlier this year.
Cho, the in-form female player in the country, did not have things all her own way in the women's championship at nearby Peninsula Golf Club.
The Pakuranga player, starting the day four shots clear, shot a final round 3-over 71 in challenging windy conditions yesterday.
However, Cho managed to hold off the challenge from Titirangi's Jane Lee, who could also only manage a 74 yesterday, to win by four shots.
