After Yang pulled a four-foot birdie putt left on the par-five 18th, the first playoff hole, Tseng made her birdie chance from the same distance to win her second straight NW Arkansas Championship.
Tseng, the world's top player by a significant margin, earned her 10th LPGA Tour victory and fifth of the season at Pinnacle Country Club. She very nearly won by a stroke in regulation, but a missed eight-foot putt left her with a three-under 68 on the day and tied with Yang overall at 12-under 201.
"It was really tough today," Tseng said in a television interview. "We were very slow today, waiting every hole. I was really nervous and I probably was thinking too much. I'm glad I made this (winning) putt."
Yang (68) had the lead nearly all afternoon after three birdies in her first seven holes, but missed several birdie opportunities down the stretch to allow a chance at a maiden LPGA Tour win to slip away.
A three-time winner internationally, Yang's missed four-footer on the playoff hole gave Tseng an opening, and the No. 1 player did not disappoint.
It was the second successful title defense for Tseng this year after she won her second straight Women's British Open in July.
Tseng and Yang made up two-thirds of the final grouping on Sunday, and, although several others made their way up the leaderboard, it was apparent that it was between the last two players for the title.
Yang went ahead by two quickly with back-to-back birdies from the second, and she maintained her two-shot advantage over Tseng with a birdie at seven. Tseng also birdied the seventh, but it came after a birdie at the fifth and a bogey at the sixth.
Tseng birdied the ninth to get within one as the pair made the turn, and the gap remained one with matching pars over the next three holes.
On the 13th, Tseng tripped to a bogey, and Yang had an eight-foot birdie putt to produce a two-shot swing and a three-shot lead. Although her miss and subsequent par left her ahead by two, it also left the world's best player with an opening.
Both players had about 10 feet for birdie on the 14th, but after Yang missed her chance and walked to the next tee, Tseng drilled hers to get to 11-under, one shot back.
Yang made a crucial par save from 12 feet at the 16th, but it wasn't enough to stop Tseng from moving into a share of the lead with a seven-foot putt for birdie. It all nearly came apart on the last hole, but it was Tseng who uncharacteristically gave Yang another chance.
Tseng's tee shot was in the rough, and she was forced to lay up on her second; Yang, on the other hand, tried for the green -- and a shot at the win -- in two, but her second shot was a low line drive that landed behind the grandstand.
After Tseng's chip rolled within eight feet of the pin, Yang had to take a free drop, and her third shot rolled to the opposite side of the green from the pin. She managed to putt within a few feet on her fourth, but Tseng had a golden opportunity for the win.
The ball rolled a bit to the left on the birdie putt, however, leaving Tseng a tap-in for par. Yang saved par from four feet to force the playoff and delay her crushing defeat.
Ai Miyazato finished just shy of a playoff, producing a round of five-under 66 to take third at 11-under 202. Cristie Kerr (68) had a decent chance at the win, but played her final four holes at one-over and finished at minus-10.
Sandra Gal (64), Amy Hung (66) and Belen Mozo (68) shared fifth at nine-under.
NOTES: Tseng moved to 2-1 all-time in playoffs, while Yang participated in her first on the LPGA Tour...Bozo's finish was a career-best...The LPGA Tour will shift to Alabama next week for the Navistar LPGA Classic, where Katherine Hull held off Brittany Lincicome by a single stroke last year.