Stanley, who led by as many as seven shots, arrived at the last hole of regulation with a three-shot cushion.
But his approach at the par-five rolled into the water and he ended up with a triple-bogey eight for a two-over 74 for a 16-under total of 272.
Snedeker was already off the course after capping his 67 on the Torrey Pines South course with a birdie at the last, where he landed a wedge to about a foot and tapped in.
Even after that final flourish Snedeker didn’t imagine that he’d have a chance to win.
However, after Stanley’s disaster, the two returned to the 18th for the first hole of the sudden-death playoff.
Both birdied the par-five and they moved on the par-three 16th.
Snedeker was over the green but his ball settled at the base of a television tower. He chipped on and made his five-footer for par, while Stanley’s putt of similar length burned the edge but didn’t drop.
“It’s just crazy,” Snedeker said. “To get my mind around what happened the last 30 minutes is pretty hard to do right now. My heart is out to Kyle. I feel bad for him to have to go through this.”
The devastating defeat left Stanley still in search of his first US PGA Tour win, while Snedeker captured his third title.
Stanley could barely control his emotions after a week of superb play ended in bitter disappointment.
“It’s not a hard golf hole,” the 24-year-old said. “I could probably play it a thousand times and never make an eight.”
It wasn’t the first time Stanley lost to a come-from-behind rival. He led by two at the John Deere Classic last season but bogeyed the final hole and saw Steve Stricker seize the title with back-to-back birdies.
“I know I’ll be back,” Stanley said. “It’s tough to swallow right now.”
American John Rollins was third in the $6 million event, carding a 68 for 274. It was another two shots back to Bill Haas and Cameron Tringale.
John Huh, the 21-year-old Korean-American rookie out of Q-school, started the day tied for second with Rollins but had to settle for a share of sixth place on 277.