'I certainly made it interesting,' said Kerr, who blew a five-shot overnight lead but hung on to triumph with a four-day total of eight-under- par 280.
Kerr bounced back from a poor start that cut into her big lead by rolling in a 30-foot birdie putt at the 11th for a three-shot advantage at 10-under par.
However, her five-iron tee shot found the left hazard at the par-three 15th. Following a penalty drop, she chipped onto the green and two- putted for a double-bogey five.
Meanwhile Han, playing in the group ahead at 16, sank a 10-footer for her third birdie of the round to tie Kerr for the top spot at eight-under. But Han pulled her drive at the par-four 18th then left her four-iron punch shot in the rough.
Han wedged her third to 40 feet and two-putted for a closing bogey and a round of two-under 70. Kerr managed to par her three remaining holes to wrap up her first win since joining the LPGA Tour in 1997, a span of 129 professional starts.
'It feels so great,' said Kerr, who earned a check for $135,000 to move into second place on the season money list with $295,606. 'I have been working hard a very long time and all I can say is that it pays off in the end.'
Kerr came into this week with 19 top-10s on her resume, including seven finishes in the top-three. With her long-awaited victory, she joined Laura Diaz as first-time winners on the 2002 LPGA Tour.
Diaz, another highly-touted young American golfer, finally broke into the winner's circle last month at the Welch's/Circle K Championship.
The 23-year-old Han, named the 2001 LPGA Rookie of the Year on the strength of her four finishes in the top 20 last year, recorded her career-best second-place finish.
'I am hoping for more opportunities like this,' Han said.
Third-year player Heather Bowie jumped up the leaderboard early with an eagle at the par-five second, but made two bogeys and one birdie on the back nine to complete a 71. She finished third at six-under 282 alongside Australian veteran Jane Crafter, who shot an even-par 72.
Crafter birdied the third and sixth holes to draw to within one shot of her playing partner Kerr, who suffered three-putt bogeys at the fifth and seventh to slip to nine-under. Crafter then bogeyed the eighth to give Kerr a two-shot lead at the turn.
Although Crafter fell out of contention with a one-over-par back nine, Han seemed up to the challenge with three birdies in a stretch of eight holes. She knocked an eight-iron to two feet to birdie the ninth, a six- iron to 20 feet for birdie at the 13th, then tied the lead with her six-iron to 10 feet at 16.
In the end, it was her poor final drive under pressure that was difference.
'This is my best finish at an LPGA tournament and it's good experience,' Han said.
Grace Park fired a seven-under 65 -- the low round of this year's tournament -- to tie for fifth with Mi Hyun Kim (73) at four-under 284. Vicki Goetze- Ackerman (71) finished alone in seventh place at minus-three.
Defending champion Se Ri Pak (71) helped round out the top-10 with Carin Koch (67), Marnie McGuire (69) and two-time Longs Drugs winner Juli Inkster (74) at two-under par.
Full field scores from the Longs Drugs Challenge