Hall shot a 6-under 66 in her final round for a 13-under total of 203 at Royal Pines. She was tied with South Korea's Shin for most of the closing holes, after Karrie Webb had led early in the round.
Shin, who had a share of the lead all day, three-putted the 18th from about 45 feet for bogey, missing her 3-footer to the left when it appeared both players were heading for a playoff.
'I can't believe it,' said Hall, who had completed her round, after watching Shin's bogey putt. 'In golf, you just don't know what's going to happen. But I'm very thrilled.'
'It was windy, but I played very well,' Hall said. 'I played smart and made some putts when I could.'
Shin, who will start her fourth season on the Japanese tour this season, finished with a 68 and was alone in second.
With tears in her eyes, Shin called her missed putt 'a bad stroke.'
'It was pressure,' Shin said through an interpreter. 'It was very disappointing as I had played so well over three days.'
Another English golfer, 20-year-old Felicity Johnson, had the round of the day -- a 65 -- to finish tied for third with Sweden's Louise Stahle (67), two strokes back.
'It was quite windy out there, and I didn't make any bogeys, so that was the key,' said Johnson, a former British amateur who quit school at 16 to play full-time golf.
Webb, who was in a three-way tie for the lead at the start of play Sunday, was plagued by wayward tee shots and missed birdie putts over the closing holes, shooting 70 to finish in fifth place, three shots behind.
'I'm obviously very disappointed not to give myself a better chance today,' Webb said. 'I really struggled with my driver all week up until the last couple of holes. By then, it was too late.
'I actually thought it might be my day, again, but I lost a lot of confidence with my driver.'
Shin Ji-yai, no relation to the other Shin and who lost in a playoff to Webb last week in the Australian Open at Melbourne's Kingston Heath, finished tied for sixth with Sweden's Karin Sjodin, both with 68s.
Three-time former Masters champion Laura Davies shot a 69 Sunday and finished eighth. Japan's Ai Miyazato (71) was seven back.
Webb, trying to win the Masters for the seventh time, took the lead with a 65-foot eagle putt on the par-5 third that she was only trying to get close for a tap-in birdie.
But Shin Hyun-ju had back-to-back birdies on the fifth and sixth holes while Webb bogeyed the sixth to give Shin a two-stroke lead.
Hall's long-range birdie putt on 18 fell just short, and she tapped in for par and then waited for Shin, playing in the group behind, to finish.
Shin's tee shot was in the middle of the fairway and her 7-wood from 176 yards onto the 18th green was outside potential birdie range before her surprise three-putt.
The tournament was shortened to 54 holes when 9 inches of heavy rain earlier in the week forced the scheduled first round Thursday to be called off.