SYDNEY, Feb 17, 2013 (AFP) - Shin took an early lead in the fourth and final round at the Royal Canberra Golf Club, expected to be a shot-for-shot contest with New Zealand amateur Ko, 15, who was chasing an historic second US LPGA win.
But her day got off to a terrible start with a double bogey on the first hole and a bogey on the second, allowing Shin to slip to a three-shot advantage with a birdie.
Ko fought back to level play with Shin, notching three birdies, but faded in the back stages to finish 14-under, also allowing world number one Tseng to charge into second place with six birdies and an eagle putting her at 16-under.
Shin, 24, held her nerve to finish at 72 for a total of 274 and take home Aus$180,000 in prize money -- her third victory in seven LPGA tour starts and 11th career win.
Having turned professional in January 2005, Shin is the first South Korean woman to win the Australian season-opener in its 21-year history.
Ko, a Kiwi born in South Korea, became the tour's youngest winner at last year's Canadian Women's Open, smashing US star Lexi Thompson's record by winning at the age of just 15 years, four months and two days.
Thompson was 16 years and eight months when she won the 2011 Navistar Classic, and had Ko won on Sunday she would have been the only player to win twice on the LPGA Tour before her 16th birthday, which is in April.
Thailand's Moriya Jutanugarn came in fourth at 13-under alongside Spain's Beatriz Recari, also at 13-under.
Leading round four scores from the US LPGA Women's Australian Open at par-73 Royal Canberra Golf Club on Sunday:
274 - Shin Ji-Yai (KOR) 65-67-70-72
276 - Tseng Yani (TPE) 68-71-71-66
278 - Lydia Ko (NZL) 63-69-70-76
279 - Moriya Jutanugarn (THA) 70-70-70-69, Beatriz Recari (ESP) 68-69-71-71
280 - Carlota Ciganda (ESP) 71-70-69-70, Gwladys Nocera (FRA) 74-71-65-70
281 - Catriona Matthew (SCO) 69-75-70-67, Mariajo Uribe (COL) 64-67-79-71, Katherine Hull-Kirk (AUS) 68-73-71-69, Thidapa Suwannapura (THA) 71-72-71-67
282 - Anna Nordqvist (SWE) 72-70-69-71, Florentyna Parker (ENG) 71-71-72-68
283 - Dewi Claire Schreefel (NED) 70-72-69-72
284 - Stacy Lewis (USA) 69-74-69-72, Christel Boeljon (NED) 72-68-74-70, Sarah Jane Smith (AUS) 68-70-73-73
285 - Stacy Prammanasudh (USA) 70-71-70-74, Giulia Sergas (ITA) 67-72-73-73, Jenny Shin (KOR) 71-69-73-72, Rebecca Lee-Bentham (CAN) 66-74-76-69, Brittany Lincicome (USA) 71-70-72-72, Gerina Piller (USA) 72-67-73-73, Rebecca Artis (AUS) 72-67-73-73, Whitney Hillier (AUS) 74-69-69-73, Jessica Korda (USA) 70-69-77-69, Jennifer Song (USA) 71-74-69-71