Jang posted her second straight round of 3-under 69 Sunday to capture the Women's British Open, finishing as a wire-to-wire winner at 16-under-par 272 for the tournament.
'I feel just great and I don't know how to feel more than that,' said Jang. 'It's fantastic. It's really fun. I didn't know that golf could be this fun.'
Gustafson fired a 5-under 67 in her final round to finish second at 12-under-par 276. Fifteen-year-old amateur Michelle Wie birdied her final two holes to shoot a final-round, 3-under 69 and shared third place with Young Kim at 10-under-par 278.
Sorenstam, who was seeking her third major title of the year, tied for fifth place with Liselotte Neumann and Cristie Kerr. Sorenstam and Kerr began the day in a second-place tie, five strokes off the pace.
Jang admitted Saturday that she would be nervous playing along side Sorenstam, who has come from behind to win 19 of her 62 career titles. But the South Korean didn't blink in the face of added pressure, opening her final round with a birdie at the par-4 first after knocking a 9-wood within 5 feet.
'The wind was left-to-right, so I aimed it under the TV camera, left side,' Jang said of her second shot of the day. 'That's my favorite club, 9-wood.'
Jang then strung together seven consecutive pars before a birdie at No. 9 moved the 25-year-old to 15 under around the turn. Jang stumbled to a bogey at the par-4 11th -- her only misstep of the round -- but got the stroke back after sinking a 3-foot birdie putt at the 15th.
By then, Sorenstam was all but out of contention for her third major title of the year. She dropped in birdies at Nos. 3 and 6, but bogeyed the ninth to fall to 9 under around the turn.
Three more birdies on the back-nine -- at 11, 15 and 17 -- were offset by a bogey at the par-4 16th and a double-bogey at the par-5 last.
Sorenstam's double on No. 18 was the result of a tee-shot she sliced out-of-bounds. Her fourth shot from the rough rolled past the hole and on to the back fringe, where she needed three putts to finish her round.
In direct contrast was Jang, who followed Sorenstam's collapse by sealing her win with a 12-foot birdie putt on the 18th. It was a fitting end to a consistent tournament for the six-year pro.
'I couldn't sleep last night,' said Jang. 'I just slept like a couple of hours, I think maybe three hours. I was nervous.'
Gustafson emerged as Jang's only real challenger during the round. Playing with Wie two groups ahead of the leader, she collected three birdies and two bogeys on the front-nine before shooting 4 under on the back-nine to get to minus-12.
But even that wasn't good enough to topple Jang.
'Obviously I am disappointed, but I played well,' Gustafson said.
Wie birdied No. 18 in each of her last three rounds. She parred her first 11 holes Sunday and got to 8 under with a birdie at No. 12 before collecting her two birdies at 17 and 18 to complete a bogey-free round.
'It was my first time playing over here and it was so great,' Wie said. 'Playing on a golf course with so much history, I just can't explain it. It was so awesome.'
Natalie Gulbis shot a 6-under 66 in her final round to finish tied for eighth place with Grace Park and 20-year-old amateur Louise Stahle at 8-under-par 280. Ai Miyazato, Karrie Webb and defending champion Karen Stupples were one stroke further back in 11th place.
Brandie Burton had the round of the day at 7-under 65. She collected five birdies and an eagle and finished tied for 22nd place at 3-under-par 285.