Simon Danielli's second half try - after a great charge from Glasgow's Fergus Thomson - was the telling score for the Scots.
But it was Scotland's brave defence in the closing minutes - the referee played an astonishing 12 minutes of added time - that proved the difference as England pummelled their line but could not break through.
Calum McRae slotted an early penalty for Scotland. Dave Walder sliced a penalty wide and MacRae extended the Scots' lead with his second before England's scrum dominance paid off, New Zealand referee Gary Wise bowing to pressure from the England players and awarding a penalty try after three re-set scrums.
But England only held the lead for four minutes before Danielli finished off another well-oiled attack.
MacRae converted and missed with a long-range drop goal before England laid siege to the Scotland line, Ben Woods held up over it as the final whistle sounded.
Glasgow's Graeme Morrison and Rory Lamont were robust throughout the match, while Craig Hamilton was unlucky to be stopped just a metre short of the try line after a superb run. Andy Wilson came on and put in an excellent defensive shift with some bone-jarring tackles to help Scotland to a gutsy win.