The WPP-owned agency will be responsible for developing global advertising and integrated communications on the existing line. It will also create launch campaigns for other classic and fashion fragrances.
The account is currently held by Wieden & Kennedy.
The business will be handled by Paris-based , which already handles advertising duties for Procter & Gamble's Hugo Boss, Jean Patou and Lacoste fragrance brands. Grey's relationship with P&G goes all the way back to 1956.
Oliver Kastalio, vice-president of Procter & Gamble prestige products, said: "Grey has been a superb marketing partner, bringing tremendous creativity to the building of our fine fragrance brands."
Escada was founded as a fashion house by Margaretha and Wolfgang Ley, and produces both women's and men's fragrances.
Jim Heekin, chairman and chief executive of Grey Group, said: "This is a tremendous win and vote of confidence from Procter & Gamble, our valued client of more than 50 years.
"We are committed to leveraging the power of the iconic Escada brand and launching new fragrances with inventive ideas that resonate in every medium."