Hatalsky ended the tournament at 9-under-par 207 for his third win on the Champions Tour and first since the 2003 Columbus Southern Open. The overnight leader played bogey-free golf until the 18th hole, where he dropped his only shot of the day.
Simpson, the first-round leader, also shot a 70 in his final round to finish at 8-under-par 208. Defending Senior PGA Champion Mike Reid (70) shared third place one stroke further back with Gil Morgan (71).
In the first round on Friday, Hatalsky played poorly on the front nine and made up for it with a scorching back nine. He turned it around Saturday with six birdies on the front at Vista Vallarta Golf Club, then continued that trend in his final round.
Sunday, Hatalsky began his round with consecutive birdies at the first two holes, both par-4s. He rolled in a 6-foot putt at the first and a 5-footer at the second, then missed short birdie tries at the next two holes.
Five more pars followed until Hatalsky moved to 10 under with a birdie at the par-5 10th. The 54 year old coasted most of the back-nine with a two-shot lead -- although a missed 7-foot birdie try at 16 could have made it three -- until his three-putt bogey at 18.
'I was solid tee-to-green, but I missed some putts,' said Hatalsky, also a four-time PGA Tour winner.
'I first noticed the scoreboard at 12 and saw I had a two-shot lead. I was disappointed to miss the birdie putt at 16, but then I saw Scott (Simpson) had made bogey at 17. I knew I could three-putt [at 18] and that's what I did.'
Hatalsky, who led heading into the final round for the first time on the Champions Tour, had some previous experience winning in Mexico: 37 years ago, he claimed the 1968 Mexico National Junior Championship.
'To come back and win again, that's quite a feat,' he said. 'It's very gratifying to come to a place like this and win.'
Simpson made two big missteps in his round: a double bogey from a bunker at the par-4 sixth, which erased two earlier birdies, and his bogey at the 17th, which eventually cost him a chance to face Hatalsky in a playoff.
'Overall, I played pretty well but I felt I threw away some shots,' said Simpson. 'I'd love to be in a playoff now. It's disappointing. I'm a little frustrated.'
Hatalsky claimed $240,000 for his win, while Simpson received $140,800 for second place.
Tom Kite finished in fifth place at 6 under after a final-round, 3-under 69. R.W. Eaks (70) and Mark Johnson (71) shared sixth place, one stroke further back.