Fox, 39, started with back-to-back even rounds, before a two-over 72 saw him drop further off the pace.
He bounced back in his final round, carding a one-under 69 to finish the tournament one-over and take home US$78,806 ($135,151).
Rai, who made birdies on four of the last eight holes, became the first Englishman since 1919 to win the event.
Rai sealed a tense back-nine shootout with a spectacular 20m birdie putt on the par-three 17th hole, firing his career-low major round with a five-under-par 65 to finish 72 holes on nine-under 271 at the formidable Aronimink course in Pennsylvania.
“Very surreal,” Rai, who has fought a neck injury this year, said. “It has been a frustrating season so to be standing here is outside my modest imagination.”
He defeated two-time major winner Jon Rahm of Spain and American Alex Smalley by three strokes, with American Justin Thomas, Germany’s Matti Schmid and Sweden’s Ludvig Aberg sharing fourth on 275.
The 31-year-old from Wombourne in central England took home a US$3.69 million ($6.3m) top prize from a record purse of US$20.5m and the Wanamaker Trophy after a dramatic final day.
Rai became only the second English player to win the PGA after Jim Barnes captured the first two titles in 1916 and 1919.
Never better than 19th in 12 prior major starts, Rai won his third DP World Tour title last November in Abu Dhabi and his only PGA Tour title in 2024 at Greensboro.
Cautious finale
Playing cautiously in windy weather on Aronimink’s sloped greens, the world’s top golfers battled the course and each other in a fight that turned as Rai surged into the lead.
Rai answered a bogey on the eighth hole with a 12m eagle putt at the par-five ninth, then sank birdie putts from just over a metre at 11 and over 2m at 13, becoming the week’s first to reach seven-under.
Schmid, seeking his first PGA Tour title in his fifth major start and first PGA Championship, sank a birdie putt from just inside 3m on the 13th hole to pull within one shot of the lead.
Rai responded by reaching the green in two at the par-five 16th to set up a tap-in birdie.
He then delivered a knockout blow by curling in his monster birdie putt over a ridge on the 17th hole to reach nine-under, while Schmid made bogey at 15 to leave Rai ahead by four strokes.
“I definitely wasn’t trying to hole that putt,” Rai said. “The shadow gave the putt a nice line the last 10 feet so that helped. It was about the speed of the putt. Nice to see it go in.”
Rahm, the 2021 US Open and 2023 Masters champion, birdied the ninth to reach five-under but made only a bogey and eight pars on the back side.
“I played really good golf,” Rahm said. “Just wish I’d have done better with the speed of the greens. Just couldn’t seem to get it to the hole, and that’s the reason why I didn’t hole any more putts.
“Even so, what Aaron did today, catching him could have been very difficult. I feel like I was still close on that playing 16 until he made that long putt.”
World No 2 Northern Irish great Rory McIlroy, who won his sixth major title at last month’s Masters, shot 69 to share seventh on 276 with American Xander Schauffele and Australian Cameron Smith.
Unheralded Smalley, in only his fifth major, teed off with a one-stroke lead and nine major winners among 22 players within four shots.
A double bogey at the sixth and bogey at the par-three eighth plunged Smalley back until his eagle-bogey-birdie finish.
American Kurt Kitayama fired a bogey-free seven-under-par 63 to match the lowest final round in major golf history.
“I’m ecstatic,” Kitayama said.
Top-ranked defending American champion Scottie Scheffler shot 69 to finish on 278.
– With NZ Herald