The Wolverines (2-0) had a pair of 14-point leads, but the Fighting Irish (1-1) refused to be routed.
Notre Dame pulled within a TD early in the fourth quarter when defensive end Stephon Tuitt made a diving interception in the end zone -- a few snaps after the Irish turned the ball over on downs -- on a pass Gardner was trying to throw away to avoid a safety.
"I made a horrible decision," Gardner said. "But the defense gave me a place to stand. They told me they believed in me and I finished it."
Kyle Brindza made a 40-yard field goal with 9:15 left to pull Notre Dame within four points.
The Irish were called for pass interference twice -- once on a questionable call when Bennett Jackson intercepted Gardner's pass deep in Notre Dame territory -- on the ensuing drive and Gardner later took advantage by accounting for a fifth TD.
Tommy Rees threw a second interception with 1:29 left.
"We came up just short on some key plays," Notre Dame coach Brian Kelly said.
Michigan has won four straight at home against the Irish.
That winning streak will stand for a while because the two storied programs won't play at the Big House again anytime soon. Notre Dame opted out of its contract with the Wolverines, making next year's game in South Bend, Ind., the last guaranteed matchup in a series that dates to 1887 and canceling three previously scheduled games.
Soon after the Irish walked off the field, the "Chicken Dance" blared and fans danced in the stands. Four months ago, Michigan coach Brady Hoke told a group of Wolverines supporters that Notre Dame was "chickening out" of the series. Hoke hasn't lost at home in two-plus seasons, winning 16 straight games for the school's longest streak in Ann Arbor.
Gardner got the last laugh on the field. He was 21 of 33 for 294 yards. His one interception was costly, though. Trying to avoid a sack in the end zone, he flipped a pass to no one in particular that Tuitt came up with to give Notre Dame hope.
Gardner also ran 13 times for 82 yards and a score.
He traded in his No. 12 for a unique number for a QB these days, sporting No. 98 with a Michigan Football Legend patch. Harmon became Michigan's first Heisman Trophy winner in 1940.
Michigan's Jeremy Gallon had career highs with three TDs and 184 yards receiving.
"I can't even imagine having a game like this," he said. "My teammates made this happen, not me."
Fitzgerald Toussaint gave the Wolverines just enough of a running game, gaining 71 yards on 22 carries and he also turned a short pass into a 31-yard catch on the final scoring drive.
Rees was 29 of 51 for 314 yards with two TDs and two interceptions -- both to Blake Countess. The first pick helped Michigan take a 27-13 lead at halftime.
"I'd like to have that one throw right before the half back," Kelly said.
T.J. Jones had nine receptions for 94 yards and a TD. Amir Carlisle ran for 64 yards on 12 attempts for the Irish.
The attendance record beat the one set two years ago when the Wolverines beat Notre Dame 35-31 -- a game with three lead changes in the last 1:12 -- that captivated 114,804 at Michigan Stadium.