The result was a repeat of the Sydney Games four years ago when the 25-year-old Estanguet also relegated arch-rival Martikan to the silver medal.
Martikan had won gold at the 1996 Olympic, ahead of Estanguet's elder brother Patrice, who took the bronze in Atlanta.
"It's fantastic. I dreamed of being a double Olympic champion," said Tony, who paid tribute to Martikan.
"We both took an awful lot of risks. We were on a razor's edge and I too could have cut myself."
Germany's Stefan Pfannmoeller took the bronze medal.
