Harwood, also a runner-up at the Open Championship, chose to lay-up and when his birdie putt from 10ft [3m] failed to drop, the trophy and Championship was Owen's.
"I'm ecstatic to win this tournament," said the 63-year-old.
"There are some great names on this trophy and it's an honour to now be alongside them."
The well-known Kiwi shot rounds of 66, 70 and 72 at the Richmond Golf Club in West Sydney to finish in a share of the lead.
This was Owen's first time contesting the Australian PGA Senior Championship which is sanctioned by the E-Z-GO PGA Legends Tour.
The former New Zealand Open Champion, who won twice on the European Tour in 1970s, has added two European Senior titles, two Senior NZ PGA Championships and now the Australian Senior PGA Championship to his startling record.