Fans rushed the court after the final buzzer as the Nittany Lions (21-9, 10-7 Big Ten) secured a victory that will help their NCAA tournament credentials. Battle finished with 15 points.
Demetri McCamey scored 16 points and Mike Tisdale added 12 for Illinois (23-8 11-7), which missed a chance to clinch no lower than the third seed in next week's Big Ten tournament.
Calvin Brock added nine points for Illinois, part of a bevy of guards who frustrated Penn State much of the game.
But it was Battle and backcourtmate Stanley Pringle, who had 20 points on his 22nd birthday, who came out with the victory.
Penn State trailed 60-50 with 5:11 left before closing to 63-62 with 58 seconds left behind a 3 from Pringle and two free throws by David Jackson.
Trent Meachem missed a runner, but Battle lost the ball on the dribble on the ensuing possession with 9.5 seconds left. Jackson fouled Davis, who missed his free throw to set up Battle's last-second heroics.
Tisdale and Davis combined for 19 points on 10-of-19 shooting and 12 rebounds for the Illini.
An uncharacteristically vociferous crowd packed the Jordan Center - most wearing white - to cheer on the Nittany Lions in their home finale. Penn State is making noise in Happy Valley with its best season since 2000-01 - the last time the Nittany Lions made the NCAA tournament.
They face another critical test with the regular-season finale at Iowa on Saturday.
Illinois goes into next week's conference tournament having lost consecutive games for the first time this season.
It was a veritable run-and-gun affair for the teams, two weeks after Penn State won 38-33 at Illinois in the lowest-scoring Division I game in three seasons. The Illini had already scored more points by halftime on Thursday night, leading 34-32.
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