The WPP agency has worked with Diageo since 1994 and currently handles creative duties for its Crown Royal whiskey and Captain Morgan rum brands in six countries.
Grey fought off competition from the incumbent M&C Saatchi, Wieden & Kennedy and Kirshenbaum Bond & Partners, which is also on Diageo's roster.
The media account remains with Grey sibling Mediacom.
Ketel One is relatively new to the Diageo family of spirit brands, which includes Smirnoff, Gordon's and Baileys. The drinks giant signed a $900m deal with the Nolet Group, the Dutch maker of Ketel One, in February last year to run the brand as a joint venture.
Estimated annual media spend on the brand is $25m.
The company is looking to expand its search marketing efforts following Google's decision to relax its ban on promoting "hard alcohol and liqueurs" last December.
Grey's win comes as its New York office searches for a new president, following the departure of Steve Hardwick last week.