Kerr finished with a 19-under 269 to win her 14th career tournament and second major after the 2007 US Women's Open.
Kerr led wire-to-wire, opening with rounds of 68, 66 and 69.
"It's a dream performance," Kerr said. "It's like you wake up or you dream - I can't even speak right now. Winning by two or three is great, but winning by 12 shots is ridiculous. It's obscene."
Kerr started the fourth round with an eight-shot lead then parred her first six holes before rolling in birdies on three of her next four holes.
Kerr earned 337,500 dollars in first-place prize money and is projected to take over top spot in the world ahead of Japan's Ai Miyazato when the rankings are released Monday.
Miyazato fired a 66 to finish five under in a tie for third with South Korea's Shin Jiyai (71). South Korea's Kim Song-Hee (69) was second. Miyazato is a four-time winner on the LPGA tour this season.
Kerr broke the tournament record for victory margin of 11 set by Betsy King in 1992 and matched the second-biggest victory in a major.
"I didn't limit myself," Kerr said. "I wanted to see how far I could take it. And I took it pretty far. I don't think I could've played better."
Miyazato was also impressed with Kerr's performance.
"That's almost too good," Miyazato said. "She's just amazing. I played really good, too, but she is just better than me."
Kerr intends to skip the Jamie Farr Owens Corning Classic in Ohio next weekend to rest up for the US Women's Open on July 8.
After winning this weekend, Kerr knows the pressure will be more intense.
"I'm there now, but I have to prove that I deserve to be there," Kerr said. "So there is still a lot of work ahead. But it feels awfully good right now."