The result brings the two clubs level on points at the top of the table, although Rangers are ranked second on goal difference.
The first chance of the match fell to Celtic when Scott McDonald, who played as a lone striker, tried an overhead kick which went wide. However Rangers took the lead when Nacho Novo headed a goal just inside the half hour mark. Barry Ferguson scored Rangers' second goal soon after half time, while Novo scored a penalty to add their third with ten minutes remaining.
Rangers manager Walter Smith had claimed last season's derby victories over Celtic meant nothing, because Celtic were already Scottish champions in theory. This result could determine if Rangers win the championship, but Smith said that there was a "long way to go" before the title could be decided. Celtic manager Gordon Strachan said that his side had failed to take the chances they made.
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