'It was one of those shots I've been hitting my 2-iron really good with this week,' said Daly, who posted a 4-under 68. 'It came out and went right at the hole. And luckily it got on the green. And with more luck, I made the putt.'
Stewart Cink, who held the lead heading into the weekend, carded a 1-under 71 to finish alone in second place at 12-under-par 204. Dennis Paulson was one shot further back at 11-under-par 205.
Daly, always a favorite with the fans, has been through more than his share of troubles throughout his turbulent career.
'It would be great to win another tournament for the fans,' said Daly. 'Without the fans, we wouldn't have a tour.'
Daly began the day two shots behind Cink in a tie for second. He opened with a birdie at the first but gave that shot back with a bogey at the par-4 fourth. Daly kept plugging along and stayed in step with Cink with a birdie at the sixth.
At the par-5 ninth, Daly missed the putting surface with his second shot as his ball settled in a greenside bunker. He hit out of the sand to 18 feet and drained the birdie putt to join Cink in the lead at 11-under par.
Daly played it safe on the back side, on many occasions playing his approaches to the center of greens and walking away with pars.
The hard-hitting 37-year-old remained near the top of the leaderboard and made his move at the closing hole with a vintage Daly drive.
After his tee shot kicked back to the middle of the fairway, Daly knocked his second to the par-five inside 30 and ran home the putt to secure the outright lead with one round to play.
'It's been a long dry spell on U.S. soil to win, but it would be great,' said Daly. 'Whether I win or lose, it's knowing I have a chance. Hopefully I can build on it.'
Cink found trouble early with a bogey at the third but was able to recover with a birdie at the sixth.
He found a bunker at the par-four 12th and failed to get out of the sand en route to a bogey. Cink persisted, however, and pitched his third to five feet for a birdie at the par-5 13th.
Cink regained the outright lead momentarily at minus-12 with a six-foot birdie at the 17th but ultimately gave way to Daly at the last.
Defending champion Tiger Woods lost ground on Saturday as the top player in the world seemed unable to find his groove.
Woods started well with a birdie at the par-4 first after his approach stopped within 15 feet of the hole. He then stumbled to a bogey at the fourth but responded with back-to-back birdies from the fifth to move to 7 under.
The 28-year-old faltered with a bogey at the ninth, however, and dropped another shot at the 11th to find himself back at 5 under.
Woods came back with a two-putt birdie at the par-5 13th but gave two more back with a pair of bogeys from the 15th.
He gave himself an eagle opportunity at the last but took two putts for a closing birdie to finish eight shots behind Daly in a group at 5-under-par 211.
Steve Flesch, who played alongside Daly and Cink on Saturday, collected four birdies and four bogeys for a round of 72 to finish alone in fourth place at 9-under-par 207.
Jesper Parnevik, Tom Pernice, Jr., Brandt Jobe and Stephen Leaney shared fifth place at 8-under-par 208.
Jay Haas, who captured this event in 1978, joined Tom Lehman, Chris Riley, Roger Tambellini, Luke Donald, Duffy Waldorf, Billy Mayfair and Bo Van Pelt at 7-under-par 209.