The 43-year-old Swede made a three-foot birdie in the third round of the playoff at the par-5 18th, while the 20-year-old Choi parred the hole.
Alfredsson had a 67 in the final round, Choi shot a 66 and overnight leader Angela Park closed with a 71 as all finished at 15-under 273.
Alfredsson also won Evian in 1994 and 98, but has battled a series of injuries and had not won a tournament since the 2003 Longs Drugs Challenge.
Someone is looking after me for (Evian) to be my next win, she said. All my friends are here. It is a very emotional place for me.
Alfredssons 2007 season was sabotaged by long-standing back and hamstring problems and her ranking dropped below No. 100.
A runner-up finish at the U.S. Womens Open last month brought her back to No. 42 and she will climb higher when the next rankings are released this week.
The win at Evian, Europes richest womens tournament with a purse $3.25 million, was her sixth on the LPGA and earned her $487,500 and a place in the season-ending ADT Championship.
The money is not important, Alfredsson said. The satisfaction of winning and making putts, there is no money in the world that can pay for that. Having memories and having to go through what I have gone through and coming out on top in the end.
Alfredssons chances of winning looked bleak when she made a bogey at the 13th hole, leaving her five shots behind Choi, who was at 17 under and threatening the Swedes course record of 63 set Friday.
Choi had seven birdies and a bogey on the front nine and took the outright lead at 14-under with a birdie at No. 9. She went up by four strokes after another birdie at 13.
I thought my course record was going to fly out of the window, Alfredsson said.
But Choi dropped shots at 15 and 16, while Alfredsson made a 10-foot birdie putt at the par-3 17th and then left her eagle putt at No. 18 close enough for a birdie that drew her even.
Park started the day at 14 under, but dropped two shots on the front nine. She made birdies at 11 and 16 to close in on Choi and had a long eagle attempt at No. 18 that would have won the tournament. She had to settle for a birdie, but the 2007 rookie of the year failed to repeat the feat in the first round of the playoff.
Parks drive left her wide on the fairway, forcing her to lay up short of the green with her second shot. She chipped to within 12 feet but missed the putt.
I was a little nervous and my ball faded to the right. I had no shot to the green, said Park, who was looking for her first LPGA victory. I dont want to be negative about anything. Thats not who I am. I am going to be out here for 10, 15 years and I dont think Im going to let one tournament get me down.
Top-ranked Lorena Ochoa, who led after a first-round 65, shot a 68 to place fifth another shot back. The 26-year-old Mexican has never won at Evian, but has five top-five finishes.
Annika Sorenstam, the champion in 2000 and 02 who plans to retire at the end of the season, shot 68 in her final round at Evian.
The 37-year-old Swede started the day 11 strokes back, but pulled to within five of the lead by reeling off six birdies in the first 12 holes. Her challenge faded with three straight bogeys beginning at 14.
Her farewell to Evian was marked with a ceremony immediately after her round to dedicate the grassy scoreboard area as Annika Sorenstam Square.
This was very special, a nice surprise, Sorenstam said. I feel like a big part of the Evian family. I will always be here in spirit, for sure.
Sorenstams final competitive event in Europe ' and final major ' is the British Womens Open at Sunningdale, England, starting Thursday.