The Spaniard had entered the day two shots off the lead at Pecanwood Golf and Country Club but soon hit the front and engaged in an enthralling battle with Arnaus and Smith at the top of the leaderboard.
With the trio inseparable after 72 holes, they headed back to the 18th tee and although all three of them hit stunning approaches, Arnaus could not make his birdie putt and it was left to Larrazábal and Smith to go again.
While Larrazábal found the fairway, Smith was in the rough and it was the 38-year-old who put his second to four feet for another birdie and the victory, with Smith three-putting from off the green for a bogey.
The Spanish duo had carded rounds of 67 to finish the week at 22 under, where they were joined by Smith after a 65.
Home favourite George Coetzee carded a 64 to finish at 21 under, one shot clear of countryman Richard Sterne and two ahead of another South African in Hennie du Plessis, Spaniard Nacho Elvira and England's Ross Fisher.
Since coming through the Qualifying School in 2007 and winning the Sir Henry Cotton Rookie of the Year Award the following season, Larrazábal has been one of the DP World Tour's most consistent performers.
He finished outside the top 100 on the DP World Tour Rankings in Partnership with Rolex for the first time last season but this win takes him inside the top ten and moves Spain onto 196 DP World Tour wins.
"What a day," he said. "I felt great this morning. It was one of those days where you just feel great and you know you’re going to have a chance. I started fast to get into the lead very quick."
Larrazábal's brother Alejandro won The Amateur Championship in 2002 and is now part of his team and Pablo was eager to give credit to his sibling.
"My brother back home is not having the best time but he has a big piece of this," he said. "The work we do back home is probably more important than the work we do here.
It was one of those days where you just feel great and you know you’re going to have a chance
"The hours we put in on the range with my brother, sometimes it's tough because when the results are not coming it is not easy to wake up early to go to a range so this piece of trophy is for him."
Larrazábal's last victory also came in South Africa at the 2020 season-opening Alfred Dunhill Championship and he was quick to pay tribute to his hosts.
"You guys are fantastic to me," he said. "Since the first time I stepped into this country in December 2007 I realised that this country has something very, very special and it's you - the people."
He also thanked long-time caddie Raúl Quirós, who missed his win at Leopard Creek Country Club.
"He has been on the bag for six years and the one week he didn't come was here in South Africa at Leopard Creek," he said. "He had a week off and I had the trophy so I want to thank him for all these years and congratulate him."
Larrazábal birdied the second and fourth to take a share of the lead and when he holed from 12 feet at the fifth he was 20 under and led by one.
He soon had company in the form of Smith, who birdied the fourth, fifth, seventh and eighth to turn in 32 and then got up and down from the sand on the tenth to get to 20 under.
Larrazábal drained a near 40-footer for eagle at the par-five tenth to lead by two but Smith responded with a birdie from 12 feet at the 11th to trim the gap.
He was tied at the top when Larrazábal played a poor second shot at the 11th and then failed to get up and down and he led after hitting a stunning approach into the par-five 12th and making a two-putt birdie from six feet.
Arnaus had picked a shot up on the third but gave it back on the next before taking advantage of the par-five fifth and seventh to turn in 34.
A fortunate break off a tree saw him make a two-putt gain on the tenth and when he put an approach to ten feet at the 11th, he was one shot back.
Larrazábal edged back in front with an up-and-down on the 12th and a tee-shot to four feet at the 13th but he dropped a shot on the next and, with Arnaus getting up and down from the sand on the 12th, there was a three-way tie for the lead.
It was Larrazábal who went ahead again with a 25-foot right-to-lefter on the 15th but he gave the shot back on the 17th after missing the green and we were headed to extra holes.
Coetzee came home in 30 in his bogey-free effort, while Sterne carded a 69, Fisher signed for a 68, Elvira recorded a 70 and 54-hole leader Du Plessis went round in level-par 72.