Keuchel got 22 first-place votes for 186 points from the Baseball Writers' Association of America in results announced Wednesday.
Toronto's David Pricefinished second, drawing eight first-place votes and 143 points.Oakland's Sonny Gray finished third.
Price tweeted his congratulations to Keuchel shortly after the announcement.
Keuchel was in attendance Wednesday night for the Houston Rockets' overtime victory over the Portland Trail Blazers and received one of the loudest ovations of the evening when he was displayed on the Toyota Center videoboard.
He led the league in wins, going 20-8 and helping Houston reach the playoffs for the first time since 2005. Using a dominant sinker and sharp slider, he led all AL pitchers in innings (232.0), WAR (7.2) and WHIP (1.02) and also had a 2.48 ERA and 216 strikeouts.
Keuchel especially excelled at home. The left-hander went 15-0 with a 1.46 ERA in 18 starts at hitter-friendly Minute Maid Park.
Some of his teammates -- and other Houston-area fans -- congratulated Keuchel on Twitter.
Price went 18-5 with a 2.45 ERA and 225 strikeouts. Traded from Detroit to Toronto in late July, he pushed the Blue Jays toward their first playoff appearance since 1993.
Keuchel became only the third Houston pitcher to win the Cy Young, joining Roger Clemens (2004) and Mike Scott (1986). He also was the first since the Astros joined the AL.
Keuchel's victory also marked the second postseason award for the Astros. On Monday, shortstop Carlos Correa was named AL Rookie of the Year. A.J. Hinch finished second in the voting to Jeff Banister for manager of the year on Tuesday.
Information from The Associated Press was used in this report.
Keuchel wins AL Cy Young award
Tim Kurkjian isn't surprised at Houston Astros' Dallas Keuchel winning the AL Cy Young award.