Karlsson and Poulter had birdie fours on the first playoff hole and both players again made the green in three at the next attempt.
Poulter, however, dramatically incurred a one stroke penalty when he dropped his ball on to his coin, causing the marker to flip over.
His 40 foot putt was therefore for a five rather than a four but he missed anyway and Karlsson rolled in his birdie effort from three feet to secure his 11th European victory and a first prize of $1.26 million.
Poulter told reporters: "I've gone to mark the ball and literally it slipped from two or three inches above the coin."
"It pitched right on the front of the coin, if it pitches in the middle it doesn't move and it's fine," said the 34 year old Englishman who called over chief referee Andy McFee when the incident occurred.
"I had a fairly good idea (it meant a penalty) and obviously I needed to clarify it," added Poulter after confirming the incident had never happened to him before.
The world number 11 was bidding for his second victory in succession after landing the Hong Kong Open title last weekend.
Sunday's incident cost him around $407,000 in prize money alone but he still won a cool $812,400.
Earlier, Karlsson had shot a 67 to finish on 274 before overnight leader Poulter (70) joined him on 14 under par.
The 41-year-old Swede said: "That was unfortunate for Ian in the playoff but I'm afraid you win some and you lose some. I didn't really like being up against Ian in the playoff, he's a feisty player with a great record and it (the one shot penalty) made it a bit easier for me."
Karlsson said Poulter was unlucky to fall foul of a particularly peculiar regulation.
He said: "The rules are there for a reason and some of them look very, very harsh, in some ways that's the purity of the game, we have very harsh rules and we actually follow them, compared to some other sports."
He said: "That's the beauty of the game in one way but obviously it's not great when these sorts of things happen, especially under these circumstances."
Karlsson made a brilliant start to his round with birdies at the first two holes and an eagle two at the third when his eight iron from 172 yards landed 20 feet short before gently rolling into the cup.