Thailand's Ariya Jutanugarn was in charge, two shots up with three holes left, until falling hard late in her round, playing a group behind Ko. The Thai bogeyed 16 and 17, handing Ko the advantage and she grabbed it.
Then with Jutanugarn in the water further back on the 18th, that wedge effectively confirmed outright victory.
Listen: Coach David Leadbetter on Ko's latest major win
Ko acknowledged smart advice she got from her caddie Jason Hamilton. "Jason kind of talked me out of going for the green in two," Ko said, looking at a 3 wood over water from a downhill lie if she wanted to take it on. "I knew if I mishit it, it was going to go straight in the water. He said 'Hey we can still make birdie going the conventional way'."
Cue an 8 iron and that sand wedge, a peach which was followed shortly after by a jubilant splash into Poppie's Pond beside the 18th.
"This is an unbelievable moment," Ko said. "But just playing the 72nd hole, birdieing the last hole, that's always a good feeling.
"For that shot to mean so much that I would win the event, that makes it extra special."
Ko finished on 12-under 276, one shot clear of England's Charley Hull and South Korean In Gee Chun, with Jutanugarn finishing fourth.
Ko had warmed up with victory in the Kia Classic in Carlsbad, California last week.
When Ko won the Evian, there was a view it would unlock the door to a flood of major triumphs for golf's most marketable woman, and arguably most marketable player.
Lydia Ko talks to the Golf Channel after winning the ANA Inspirational
Yesterday reinforced that view.
"You know, you really can't really rank them," Ko said. "Winning this event is great, obviously jumping into Poppie's Pond, that kind of tradition will definitely be one of the highlights of my career."
Ko's body language is a wonder. She seems to have an ability to treat good and bad moments with a calmness rare in a sportsperson so young.
Ko had started the day a shot behind third-round leader, American Lexi Thompson and went in front at 11-under. But Jutanugarn made three straight birdies, combined with a nine-hole birdie-free streak by Ko, which changed the momentum until near the end.
Ko had a bogey-free final round, holing a 22-foot birdie putt on the par 3 fifth, and a 40-footer on the par 3 eighth. Throw in three key saves on the back nine - notably a 10-footer on the 17th - and it added up to an outstanding day's work.
She has retained an ability to give off a sense that it's fun, never a grind. It's a precious gift. Long may that last.
Ko-incidentally
• Lydia Ko is the youngest golfer to record two major victories, at 18 years, 11 months, 9 days.
• Ko finished at 12 under 276, one shot clear of England's Charley Hull and In Gee Chun, of South Korea, to pocket US$390,000.
• She has won 12 LPGA titles, and her career earnings stand at US$5,893,957.
