The victory was the 16th of Kerr's career, and her third in five career playoffs.
Kerr shot a 2-under 69, and Pettersen had a 67 to finish at 12-under 272 on the River Course.
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Kerr nearly won it on the first extra hole. Her approach to No. 18 stopped about 6 feet away from the hole while Pettersen's approach came up short of the green. But Pettersen chipped it close, and Kerr's putt slid past the hole.
On the second hole, Pettersen hit her approach just off the back of the green, and Kerr's stopped nearly hole high about 15 feet away. After Pettersen mis-hit her chip, leaving it well short, Kerr rolled her putt to 18 inches, forcing Pettersen to make hers, and her try missed badly.
It was the second year in the row the tournament ended in a playoff. Last year, Paula Creamer and Jiyai Shin played the longest two-player playoff in tour history -- nine holes -- before Shin won. The victory came Monday morning, after the two played the 18th hole eight extra times in a row Sunday night.
The playoff format was changed for this year, with the plan to play No. 18 three times, then move to the par-4 16th, where Shin finally won last year, but Kerr made sure the huge gallery got to see it end.
Pettersen, who gained her first career victory here in 2007 with a three-hole playoff victory over Jee Young Lee, fell to 5-3 in her career in playoffs. She won in a playoff two weeks ago in Hawaii.
The finish turned into a two-player battle after looking as if it might get wild.
Angela Stanford also had a share of third until the final hole, when she lipped out a short par putt for her first bogey in a closing 69. She shared fifth place with Stacy Lewis, who closed with a 70.
At one point, Pettersen led by a shot, with Kerr, Jutanugarn, Lee and Stanford all one back.
Kerr led most of the day, but when she missed the 14th green to the right, Pettersen hit her approach close. Kerr's sidehill chip left her a long two-putt, and Pettersen's birdie put her in front at -11.
Just as they walked off the green, Lee's third consecutive birdie moved her to 10 under, and Jutanugarn's fifth birdie in six holes also got her to minus 10. Moments later, Stanford rolled in an eagle putt on the par-5 15th, creating a four-way tie for second with just a few holes to play.
The former champions wasted no time separating themselves again.
Kerr had a chance to regain a share of the lead at No. 15, but her makeable eagle putt slid just by on the left, and she and Pettersen both had short birdie putts, giving the leaders some breathing room.
Kerr, who made several tester putts to save par during her round, pulled even on the par-4 16th, rolling in another from inside 10 feet for birdie after Pettersen's longer birdie attempt missed.
Both parred in, with Pettersen's long birdie try at No. 18 missing right by half an inch, and Kerr having to make yet another tester, this one from about 6 feet, to force the playoff.