The 20-year-old Thai star fired a four-under par 67 in the final round to finish 72 holes on 20-under 264 at Highland Meadows in Sylvania, Ohio.
Ryu birdied four of the last five holes and six on the back nine but her lone bogey at 16 dropped her one adrift of Chanettee before both contenders birdied the par-5 17th and 18th holes to give Chanettee the triumph.
"Actually today I'm really nervous, and get stressed," Chanettee said.
"This year I didn't expect I was going to win, so lots of stress and nervousness.
"On the last putt on the last hole my hand is shaking so hard. I'm just like, 'Get in, get in. I want birdie, not par.' I made it."
Sweden's Linn Grant, the 2023 Dana Open winner, and Taiwan's Cheng Ssu-Chia each fired a 68 to share third on 270 with China's Mary Liu and Lin Xiyu sharing fifth on 272.
Chanettee, ranked 43rd, won her only prior LPGA title at last September's Portland Classic as a Monday qualifier.
"I'm starting this year looking for second trophy so right now I can't imagine," Chanettee said. "Portland, I feel like freedom. Right now I'm feeling like I'm going to looking for third trophy. I think it's coming."
This year, she was third at the Americas Open in May and shared eighth at last month's Dow Championship before breaking through for a second LPGA victory.
"This week is like a lot of experience," Chanettee said. "I think I'm going to improve my skill.
"Last day I cannot like calm down because my heart is like boom, boom, boom, boom. Every hole. I think I'm going to improve my emotion and my skill."
Ryu, last year's LPGA Rookie of the Year, won her only LPGA title at last October's Northwest Arkansas Championship. She has seven top-10 showings this season.
"Really good shots and almost get it," Ryu said. "I think that's highlight this week.
"I think now my (finishing) first really good and hopefully move up for next tournament."
Chanettee, who began the day with a three-stroke lead, surged early with birdies at the third, par-5 seventh and par-3 eighth while Ryu's only front-nine birdie came at the par-3 sixth.
Ryu charged on the back nine with birdies at 10 and 12 and added birdies at the par-3 14th and 15th.
Chanettee, meanwhile, stumbled with a bogey to begin the back nine and a birdie-bogey run at 12 and 13.
Deadlocked for the lead, Ryu made her first bogey at 16 to fall one stroke back and Chanettee and Ryu both birdied the last two holes to deliver Chanettee the trophy.
Sharing seventh on 274 were Filipino Dottie Ardina, Thailand's Jasmine Suwannapura, Norway's Celine Borge, Australian Sarah Kemp, American Stacy Lewis and South Korean Choi Hye-jin.
South Korea's Joo Soo-bin made a hole-in-one at the par-3 second hole, sinking the 151-yard ace with a 6-iron.
