Steinhauer capitalized on a Saturday 66 to win by three shots over Sophie Gustafson and Cristie Kerr at 7-under 281, even after closing with a pedestrian 72 in the final round at Royal Lytham & St. Annes.
It was her second major championship and first since the 1992 du Maurier Classic, the event that was replaced as a major by the Women's British Open in 2001.
Of course, Steinhauer had also won back-to-back Women's British Opens in 1998-99 before it was a major, so she was no stranger to holding that title -- even if she was a little surprised to be holding it again.
'I feel like I'm living in a dream. I just absolutely am stunned,' she said afterward.
Steinhauer didn't have far to travel for her title defense this week. She was in France along with the other top pros for the Evian Masters last week, where Natalie Gulbis claimed her long-awaited first victory.
Annika Sorenstam tied for sixth place in France, her first top-10 finish since March. At last year's Women's British Open, she fumbled her way to a 79 in the final round and finished 14 shots behind Steinhauer.
Sorenstam has just one British Open win, in 2003 at Royal Lytham & St. Annes. Plenty of players will be looking for their first major this weekend, including world No. 1 Lorena Ochoa.
This is the first time the Women's British Open will be played at the Old Course at St. Andrews, the site of so many memorable men's British Opens.
The LPGA Tour is off for a week following the British Open, returning Aug. 16 for the CN Canadian Women's Open, which was won by Cristie Kerr last season.