Australian Karis Davidson's gallant challenge ended with a career-best tie for 12th as Ryu converted a one-stroke third-round lead into a breakthrough two-shot triumph at Hazeltine National Golf Club.
The South Korean fired a final-round two-under-par 70 to prevail at 13 under to land her maiden major championship and the record $US1.95 million ($A2.83 million) winner's cheque - the biggest pay day in women's golf history.
After opening with a one-over 73, Ryu is the first player in 62 years to win a major from 10 shots behind after round one.
The 25-year-old's decision to switch putters mid-tournament paid off as Ryu followed up with a Friday 64 and Saturday 68 to reel in runaway first-round leader Ina Yoon.
"My coaches told me just trust yourself and that's it. You don't have another problem so just trust your shot and trust your caddie and trust yourself on the golf course," Ryu said of her incredible recovery.
"Feels like dreams come true right now because I tried a couple times to be a major champion but I didn't get it. Today I did it, so I'm so happy right now."
Yoon retained a five-shot lead entering the weekend but ultimately had to settle for second behind her fellow Korean after also posting a final-round 70.
Canadian Brooke M Henderson closed with a 72 to be equal third with Dutchwoman Dewi Weber (70) at 10 under.
Americans Allisen Corpuz (70), Auston Kim (71) and Alison Lee (72) tied for fifth place, six strokes behind Ryu.
World No.1 Nelly Korda wrapped up a frustrating weekend on the greens with a 73 to finish in a four-way tie for eighth at six under, failing to become the third women to win the first three majors of the season.
After starting the day five shots back in equal eighth, Davidson never threatened in also posting a final-round 73 to finish one stroke further back at five under.
Fellow Australian Grace Kim (72) tied for 24th at one under, a month before her Evian Championship title defence, while Robyn Choi (75) was equal 45th at three over.
It wasn't all plain sailing for Ryu, who wobbled early with three bogeys in her first five holes as Henderson briefly snared the outright lead.
But the 2023 LPGA rookie of the year rebounded brilliantly with four birdies in a mid-round stretch, draining lengthy putts on nine, 10 and 12 to wrestle back control.
Adding further lustre to her victory, Ryu was playing her first tournament in six weeks following minor surgery.
"Yeah, just a little bit short off-season during the season," she said.
"But I just worked hard with my coach still in Korea and it worked this week, so I just thankful to my coach and everybody."
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