Gangluff shot a 3-under 69 and match Steele, who posted a 2-over 74, at 16-under-par 272.
Steele held a two-shot lead on the 72nd tee, but drove into a fairway bunker. He pitched out, then knocked his third to 30 feet. Three putts later and it was a double-bogey and a playoff, one Gangluff almost missed.
Gangluff was headed to the car with his wife when a Canadian Tour official stopped him to let him know that there would be a playoff.
At the first playoff hole, the 18th at Glendale Golf and Country Club, both players sailed over the green with their approaches. Steele had a horrible lie and his ball only moved about 10 feet and stayed in the rough.
Steele would never have a look at his par chip. Gangluff holed out from 30 feet off the fringe with a bladed sand wedge to secure his second victory on the Canadian Tour.
'I've seen a lot of crazy things in this game, but that was the craziest,' admitted Gangluff, whose other win came at the 2004 Lewis Chitengwa Memorial Championship. 'I feel bad for Brendan. He's a great kid and a great player, and I've been there. It was a shocker. I still can't believe it.'
'There is absolutely no tougher way to lose,' said Steele. 'I completely gave it away. When someone comes and gets you, you can live with it, but I couldn't have given that one away any more.'
Eugene Smith carded a 1-under 71 and finished alone in third place at minus-15.
Wil Collins (71), Scott Gibson (73), Anthony Rodriguez (71) and Michael Sims (65) shared fourth place at 14-under-par 274.
Steele bogeyed the seventh, then came a half-hour delay.
A 48-year-old spectator watching the event with his son suffered a heart attack. Play was called as paramedics attended to the man, who was listed in good condition on Sunday.
After the stoppage, Steele bogeyed the eighth as well. He mixed birdies at nine, 13 and 14 with bogeys at 10 and 12, then the disaster at the closing hole.
'The delay was tough, but that is no excuse,' acknowledged Steele, a tour rookie. 'I just didn't get it done.'
Brien Davis (67) and Tom Stankowski (69) tied for eighth place at minus-13. Darren Griff only managed an even-par 72 and took 10th place at 12-under-par 276.