Wayne Levi (68), Andy Bean (67) and Bobby Wadkins (70) shared second place at minus-8.
Jerry Pate was the overnight leader and looked poised for his first win anywhere since the 1982 Players Championship. Unfortunately, Pate tallied four bogeys on his front nine and settled for a 3-over 73 and fifth place at minus-7.
Thorpe was tied for the lead with Wadkins when he reached the final hole. Thorpe, playing with Levi and Mike Hill in the group ahead of Wadkins, missed the green short and right with his second. His chip ran 18 feet past the hole, but Thorpe calmly stroked home the par putt to stay at 9 under par.
Thorpe had to wait to see if either Levi could reach minus-9 or Wadkins would stay there. Levi had a 15-foot birdie putt from short of the hole that slid by the cup, prompting Levi to fall to the ground in disbelief.
Now Wadkins had to play the closing hole at the Red Course at Eisenhower Park. He missed short and right like Thorpe and ran his chip almost 20 feet past the stick. Wadkins missed his par putt, giving Thorpe his second victory at this event in as many years.
'I feel fortunate to win,' said Thorpe, who picked up $225,000 for the victory. 'I didn't think I could make up four strokes on Jerry Pate with the way he was playing. I knew Bobby Wadkins was swinging well.'
Thorpe joined Bruce Fleisher (1999-2000), Lee Trevino (1994-95) and George Archer (1990-92) as players who have successfully defended their titles at this tournament.
The victory was his second this season after winning the Farmers Charity Classic in early June. Thorpe picked up his ninth career win on the Champions Tour and became the fourth multiple champion on the elder circuit in the 2004 campaign.
Thorpe wasted little time in going into red figures as he sank a 12-foot birdie putt on the first hole. He added a 10-footer for birdie at four and an 8-foot birdie putt at eight to make the turn at 3 under.
Thorpe was in the lead at 9 under par, but missed a 4-foot par putt at the 16th to fall back to minus-8. He quickly reclaimed the lost stroke with an 8-foot birdie putt at the 17th, then the dramatic par save at the last.
Wadkins, whose lone victory on tour came at this event in 2001, tallied two bogeys in his first five holes, but rebounded with back-to-back birdies at eight and nine.
Wadkins was 8 under and parred the first seven holes of the second nine. He ran home a 6-foot birdie putt at the 17th to tie Thorpe in first, but played the 18th almost exactly the same way Thorpe did. Unfortunately for Wadkins, his par-saving putt did not fall.
'I was trying to make birdie on the last hole,' admitted Wadkins. 'I did not want to play anymore golf today. I had the line on the putt at 18. Jerry Pate just made it from 40 feet in front of me so I knew what it was going to do.'
Bean mixed six birdies and three bogeys, while Levi collected three birdies on the front nine. He dropped his lone shot of the round at the par-4 12th for his highest finish this season.