Kite had a chance at the 72nd hole, but hit a poor approach. He needed a birdie at the last to tie McNulty, but Kite hit a terrible approach left of the hole and failed to chip in.
That gave McNulty his second consecutive victory after a title last week at the SBC Championship. He won his first week on the Champions Tour at the Outback Steakhouse Pro-Am and now looks to be a lock for the Rookie of the Year.
'Everyone has been giving a stink about this rookie business,' said McNulty, who pocketed $440,000 for the win. 'I'm not too sure about 'rookie' after 28 years. I think we should have 'Best Newcomer of the Year.' I'll take Rookie of the Year. That would be fantastic.'
Allen Doyle held the lead during Sunday's final round, but did not have enough at the end. He shot a 3-under 69 and took third place at 8-under 280, two strokes better than U.S. Senior Open winner Peter Jacobsen, who carded a 5-under 67 on Sunday.
Hale Irwin, who battled back and neck injuries all week, only shot a 3-over 75 on Sunday, but it was enough to win the year-long Charles Schwab Cup, which awards a $1 million, tax-free annuity.
Craig Stadler, a five-time winner this season, shot a 70 on Sunday and matched Irwin in a tie for seventh. He trailed by 39 points at the start of the tournament and that would be the final margin, although Kite had a chance if he won the tournament.
'It's a long year,' said Irwin, who won this competition in 2002. 'This is why we do it. Talk about the money, which is great, but putting this up in your trophy case - I'm just proud of this.'
McNulty made the turn at 1 under par after birdies at the first and eighth holes and a bogey at No. 3. His ascension up the leaderboard took place after he opened his back nine.
At the 11th, McNulty ran home a 40-footer for birdie to tie him for the lead with Doyle at minus-7. McNulty knocked his 5-iron approach to a foot at the 12th to set up birdie and go one clear.
He came up short of the green with his second shot at the par-5 13th, but pitched his third inside 2 feet. McNulty tapped in the birdie putt there and polished off four birdies in a row with an 8-footer at the par-3 14th. That birdie gave him a three-shot lead over Doyle and a four-stroke advantage over Kite.
But Kite, the 1992 U.S. Open champion, would fight back. He ran his second shot at the par-5 13th to 3 feet and made the eagle putt to get within two. At the 14th, Kite hit his tee ball to 4 feet and drained the birdie putt to close the gap to one.
Kite had an 18-foot look at birdie at the 15th, but missed left. McNulty hit his tee ball at the par-3 17th to 12 feet and stroked home the putt to reclaim a two-shot cushion over Kite. McNulty had 65 feet for birdie at the last and his lag putt came up five feet short. He converted the nerve-wracking par putt and waited as Kite, in the last group, was the only one who could catch him.
Kite did not go away. At the par-5 16th, Kite pulled out his 5-wood again and again the result was sensational. His second landed left of the hole on the fringe, then bounced 9 feet past the hole. Kite's eagle putt that would have tied McNulty for first skimmed the left edge, but did not fall. He tapped in for birdie and had two holes to make another birdie and force a playoff.
Kite had a decent look at birdie on the 17th, but his 20-footer from over the flag died left. At the 18th, a hole he birdied in all three rounds, Kite found the fairway off the tee. He badly pulled his second shot into the left rough and now needed to hole out not only to force extra holes, but to have any chance at the Charles Schwab Cup $1 million annuity.
His chip from the rough came up 4 feet short and McNulty joined Stadler as the only players to win back-to-back events on the Champions Tour schedule in 2004.
'I remember last year watching this tournament in England and watching Jim (Thorpe) win the tournament and I thought, man that would be a nice trophy to hang up in my shop,' said McNulty. 'It came very quickly and I'm very, very delighted.'
Kite tallied four bogeys in his first seven holes until the comeback late in the round. He shot an even-par 72 on Sunday and was disappointed he couldn't make the winner's circle.
'It was my tournament and all I had to do was play some decent golf,' admitted Kite, who won this year's 3M Championship. 'I wasn't able to do it until the last six or seven holes.'
David Eger (69) and Jose Maria Canizares (75) shared fifth place at 5-under-par 283.
Irwin and Stadler were joined in seventh place by Thorpe (69), Morris Hatalsky (72) and D.A. Weibring, who fired the lowest round on Sunday with a 7-under 65. That group came in at 4-under-par 284.