The YouTuber-turned-boxer, 24, was rocked by a solid right hand which sent him into the ropes from former UFC champion Woodley, 39, in the fourth round.
But Paul, who had had won his previous four fights within two rounds, won 77-75, 75-77, 78-74 on the scorecards.
On the undercard, British heavyweight Daniel Dubois made easy work of Joe Cusumano with a first round technical knockout victory after sending his opponent to the canvas three times.
And Tommy Fury's hopes of fighting Paul were boosted by a win over US newcomer Anthony Taylor, Paul's sparring partner.
"Let's get it on Jake. I've done my bit, you do your bit," said Fury after he won by unanimous decision on his US debut.
"It should be easy enough for him, I went four rounds with his sparring partner. I'm a seven-fight novice in the gym, nowhere near the finished article."
But Fury may have to wait for his showdown with Paul as Woodley, who was making his boxing debut, demanded a rematch, believing he had won.
Paul - who is three inches taller than Woodley but at 13st 8lb only half a pound heavier - said he would take the fight, if his opponent got a tattoo.
"Me and Jake need to run it back. I want a rematch. I feel like I won," Woodley said.
"If you get a tattoo 'I love Jake Paul' then we will run it back," Paul retorted, to which Woodley agreed.