The Greens posted their highest score of the Finland-based tournament so far in the first innings as they finished on 139-6, although Austria looked set to chase it down with ease after some destructive early batting.
Quick wickets from the Sarnians pushed the required run rate back above six an over, however tail-ender Umair Tariq saw his side home with just two balls to spare.
Both sides came into the fixture with a 100% record in Group B of the European qualifiers , although the Austrians had looked the more dangerous of the two with the bat after finishing 214/4 in a 141-run win over Slovenia in their previous outing.
Luke Le Tissier and Zak Damarell wasted no time getting going after Butler sent his side in to bat, reaching the milestone of a 50 partnership midway through the sixth over.
Le Tissier in particular was taking the game to the Austrians, playing an impressive reverse sweep for six in between a number of fours.
Austria would eventually halt Guernsey’s momentum, though, as Damarell was caught in the deep for 19 before Le Tissier fell for 37 in the very next over to leave the Sarnians 67-2 from eight overs.
Matt Stokes and Josh Butler, who had swapped positions in the batting order, managed to steady the ship as they took Guernsey past the 100 mark in the 13th over.
The pair could not add to their partnership any further, however, and in the space of 10 balls Guernsey had lost Stokes, Butler, Ferbrache and Nightingale while adding just a single run in the process.
Ant Stokes and Jason Martin both hit a maximum apiece during the last few overs and finished unbeaten to steer Guernsey to 139-6.
Will Peatfield gave the Sarnians the dream start in the second innings, bowling Habib Ahmadzai clean third ball.
Skipper Razmal Shigiwal got 42 from just 28 balls while Iqbal Hossain added 38 at a strike rate of over 211, meaning Austria needed to score just 36 from the last seven overs.
Peatfield and Stokes launched a Guernsey fightback following the dismissal of Austria’s danger men as they left their opponents needing more than a run a ball with two wickets to spare.
Eventually, though, Tariq and Akbarjan managed to see their side home in the 20th over as the former played a late cut for four to take them to the top of Group B with three wins from three.
‘It is a disappointing result for us – we definitely fell 20 or 25 runs short of what we wanted with the bat after the start we had,’ said Josh Butler.
‘The lads battled really hard in the field and with the ball but ultimately we did not have quite enough runs to play with.’