Ariya frittered away a seven-shot lead with nine holes remaining before parring the fourth playoff hole to edge South Korea's Kim Hyo-joo and become the first player from Thailand to lift the trophy.
The 22-year-old from Thailand carried a four-stroke lead into the final round, but needed a play-off to overcome Kim Hyo-joo.
Smith started the tournament with back-to-back 67s, but shot a 74 on Saturday to fall into second place.
Both players made par on the third play-off hole, before 2016 Women's British Open victor Jutanugarn saved par to win the title after a deft bunker shot on the 18th. She missed it well left and had to drain a knee-knocking bogey putt just to stay one shot ahead of Kim with one hole to play. Jutanugarn, already a nine-time victor on the LPGA Tour and the 2016 British Open champion, appeared under no pressure whatsoever when beginning her final nine holes.
Carlota Ciganda is solo third at seven under. The advice proved paramount when May's clubs didn't arrive in time for a Monday practice round, and she began the championship having laid eyes on only nine holes of Shoal Creek.
They again missed the green, Kim in a bunker to the right and Jutanugarn over the putting surface in another bunker.
"I was definitely nervous, but not like I've been in the past", Smith said of heading out early with a share of the lead.
She has a way to go, but nonetheless took delight at seeing her name atop the leaderboard the entire round. "Not because I want them to play golf, but because I want them to have a good life".More news: Tesla Teases Model Y Compact SUV
"I think I'm going to sleep well tonight".
Thai star Ariya Jutanugarn is the closest challenger at seven-under, with Smith's countrywoman Su Oh outright third at six-under. While there have been glimpses of strong play this season, like a 67 in the third round of last week's LPGA Volvik Championship and a 67 in the final round of the HSBC Women's World Championship, her best finish is a T26 at the Kia Classic.
"She's a spectacular player, obviously", Smith said.
Vision54 coaches Pia Nilsson and Lynn Marriott were exhausted by the time they got off the Jutanugarn rollercoaster. She had five birdies on the back nine, including the par-4 18th, to finish her day in control at the event.
Round two was finished early on day three, with the cut-line unchanged and Ko sneaking into the back half of the major tournament.
"I never had that final putt to win. I felt like I had a last chance to make myself proud".
"I sent him a text message on Sunday and I said, I don't know what I'm doing". He was briefly tied for the lead Saturday until three-putt bogeys on the 16th and 18th holes, and he had to settle for a 68.