Defending champion Tseng missed an 8-foot birdie putt on the final regulation hole at Pinnacle Country Club, and so had to settle with for a tie with Yang at 12-under 201.
But on the playoff hole, Yang pulled a 4-foot birdie putt left on the 18th and Tseng, the world No. 1, responded by making her birdie chance from the same distance, claiming her second Arkansas win.
Tseng also defended her Women's British Open crown in July.
Yang held the lead for most of the final round thanks to three birdies on the first seven holes. But she missed several birdie opportunities down the stretch, letting her chance for an initial LPGA Tour win to slip away.