Bryan Cooper sent the 6-1 shot straight to the lead with Nichols Canyon (2-5) his closest pursuer throughout.
The pair were almost as one before Petit Mouchoir jumped the second-last better and found another gear.
Petit Mouchoir sealed a seven-length success from Nichols Canyon with  Ivanovich Gorbatov in third.
Henry de Bromhead's charge  was slashed to 10-1 from 25-1 for the Champion Hurdle by RaceBets following the victory.
De Bromhead confirmed the two-mile hurdling crown at Cheltenham is high on his agenda.
He said: "It was amazing. He gave him some ride. It was brilliant and he jumped deadly.
"It's lovely when it works out. It's been a frustrating few days now but that's made up for it all. It's great.
"I'll speak to Eddie and Michael (O'Leary), but I think we have every right to consider the Champion Hurdle.
"He hasn't had a hard season thus far so the Irish Champion Hurdle might be a plan. I'll have to speak to the lads."

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Christian Benteke scored Liverpool's winner in the March meeting after Marriner gave a stoppage-time penalty.
"He gives the penalty last year so we've got a negative in our mind anyway," said Pardew.
"I don't think Andre Marriner should have reffed this game."
Match of the Day pundit Danny Murphy said: "I don't agree with not refereeing. You can't look back at every game and start taking referees off games."
The Professional Game Match Officials Limited - led by general manager Mike Riley - assign officials to matches.
In April, it stood down Leicester fan Kevin Friend from officiating a match involving their title rivals Tottenham.
Wilfried Zaha twice went down in the box for Palace, while team-mate Benteke, who left Liverpool in the summer, also had appeals for a penalty rejected.
"They are tight but they are probably no worse than Christian's last year," Pardew said.
"Why was Mike Riley giving him the game today? I can't understand it. It's just a little bit frustrating."
Marriner awarded 15 fouls and a yellow card against Palace and five fouls and two bookings against Liverpool.
Liverpool were twice pegged back by headers from James McArthur before Joel Matip climbed highest to restore the visitors' lead before the break.
Roberto Firmino made the game safe for Liverpool with a chipped finish with 19 minutes to go.
Palace, who have taken one point from their past four Premier League games, are 12th in the table.
Petit Mouchoir ran out an impressive winner of the Ryanair Hurdle at Leopardstown on Thursday with odds-on favourite Nichols Canyon in second.
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Crystal Palace boss Alan Pardew said Andre Marriner should not have refereed Saturday's 4-2 Premier League defeat by Liverpool - because he awarded the Reds a penalty in last season's fixture.