Senior shot a 68 and Lehman had a 69 in the final round at the Shoal Creek Country Club and they finished deadlocked at 13-under-par 275.
The players then went out to repeatedly play the 18th hole until one of them captured the sudden death showdown.
They both parred the hole the first time they played it, but Senior drove into the rough on the next trip down the hole and missed the green. He pitched to within 7 feet, but after Lehman had made a routine par Senior missed his putt to give Lehman the victory.
It was the fifth win of Lehman's Champions Tour career and his third this year. He had the lead after the first round, but began the final 18 holes two shots behind front-runner Mark Calcavecchia.
Lehman won another major on the Champions Tour last year at the Senior PGA Championship.
Loren Roberts shot a 65 Sunday to finish alone in third at 277 while Michael Allen was fourth at 278.
Calcavecchia fell back into a tie for fifth at 279 after shooting a 75. Calcavecchia, who had been looking for his first Champions Tour victory, had as much as a six-shot lead on the back nine of the third round Saturday, but wound up with only a one-stroke advantage heading into Sunday's action.