He ran off three straight birdies early on the back nine, closed with a 6-under 65 and won by one shot when Patrick Reed had a 45-foot putt roll back to his feet on the 18th hole, and Woods came up a few feet short of a birdie putt on the final hole.
A fine 65 on Sunday saw Casey come in at 10 under overall, setting a target that Woods - trailing rookie Corey Conners by a stroke at the start of the day - could not quite reach, falling one shot shy in a mixed final round.
But the 14-time major victor, playing just his fourth PGA Tour event since undergoing spinal fusion surgery last April, was unable to repeat the feat and had to settle for a share of second place.
"I felt very comfortable", said Woods after his close-but-no-cigar finish.
Wallace went for the green in two on the playoff hole, the 18th, needing only 20 feet for an eagle. 'It's hard because when I play in my weeks off or practice, it feels pretty good. Today I wasn't quite as sharp as I would have liked to have had it, but I had a good shot at winning this golf tournament.
"I made just too many mistakes out there".
The 55-year-old Hall of Famer edged Tommy Tolles, Tom Pernice Jr. and Scott McCarron to win for the first time as an individual on the PGA Tour Champions.
The victory gave Englishman Casey his first US PGA Tour victory since the 2009 Houston Open. He three-putted the par-5 14th for par, though, and it seemed to end his chances.
And then came Woods on a Sunday in March, the Masters just a flip of the calendar away, and you were reminded of what had been lost these last few years. That was the most birdies for any player in a round in the tournament. "A couple putts here and there, it could have been a different story".
Woods hopes to build on this momentum when he journeys next week to a more familiar stomping ground - the Bay Hill resort in Orlando where he has won the tournament formerly hosted by Arnold Palmer eight times.
"It was ... a week where Tiger played some good golf and (we) got to see some awesome stuff and hear the roars", said Paul Casey, the tournament's victor. I've won my share of events here and overseas, so I like to be one back or near the lead. He answered Sunday with all eyes on someone else - Woods - by going out in 33, and then getting rewarded for aggressive play. He shot a 70 in the first round on Thursday, before carding a 3-under-par 68 on Friday. With just a wedge in his hand, he twirled the club after playing his second shot, thinking he had fired his approach in close. This time, he's physically fine and he's actually swinging the club as good as I've seen him back in the day. "That's why I thought Tiger was going to win today, because he's probably watched Phil win, and figured I want to win".
Masters champion Sergio Garcia (65) finished fourth at eight under while Australia's 2013 Masters victor Adam Scott (72) was tied-16 at three under.