It was the 21-year-old Tseng's third major title and second of the year to go along with the Kraft Nabisco. She has four LPGA victories overall, having won 2008 LPGA Championship and 2009 Corning Classic.
Hull came into the round trailing by four strokes but trailed by just one heading into the 18th. But she missed a 20-foot birdie attempt and had to settle for a 70, and Tseng made her par putt to shoot 73 and total 11-under 277 at Royal Birkdale.
Tseng earned $408,000.
She drove into a bunker on the last hole and was just off the green in three. Hull chipped poorly before her birdie attempt went past the hole, and Tseng coolly stepped up to make the winning putt.
"I was nervous and tired with all the pressure and attention out there today," Tseng said. "Katherine played really well and put me under a lot of pressure. It was the toughest win I've had to date. I usually come from behind to win. I've never won from the front before."
Tseng said Annika Sorenstam sent her a message overnight.
"She said, 'I'm very happy to see you on top, that's where you belong,' and wished me good luck for today," she said.
On the first three holes, Hull had trimmed three strokes off Tseng's lead — with birdies at the second and third — while Tseng dropped a stroke at the third. Hull hit a 5-wood to 12 feet at the second and made it, then an 8-iron to 40 feet at the fourth and holed that as well.
Hull's putt for birdie at the 17th lipped out.
"I'll probably be working on my short game after that finish," Hull said with a smile. "I couldn't believe when that putt on 17 stayed out, but, never mind, I did the best I could. I felt pretty good coming into the week, so there are lots of positives I can take from my performance."
Sweden's Caroline Hedwall won the Smyth Salver, awarded to the leading amateur for her 3-over 291.