Australia's Will Power crashed out of the race early, and had to watch on television in street clothes as Hunter-Reay snatched the title away at Auto Club Speedway.
Hunter-Reay went into the trailing Power by 17 points, but once Power was out of the race, he only needed to finish fifth or better.
He worked his way through the field and into position to wrap it up, but had to hold on over some intense final restarts to pull it off.
He crossed the line in fourth to win the championship by three points.
Ed Carpenter won the race for his second career victory.
Will Power, in his third attempt at winning the IndyCar championship, again had his chances spoiled by a wreck.
The Australian lost control of his car 55 laps into Saturday night's season finale and spun hard into the outside wall at Auto Club Speedway.
It's the third consecutive year Power has gone into the finale with the title on the line and had an incident snatch away his chances.
He brushed the wall at Homestead in 2011 and lost the title by five points to Dario Franchitti.
Last year, his points lead was gobbled up when another car hit him on pit road in the penultimate race, and he was involved in the 15-car accident that killed Dan Wheldon in the finale.
Power broke his back in that accident in Las Vegas.
"Man, depressing," Power said after leaving the care center. "I wish I could care less."
Power laughed nervously, searching and failing to find the right words to describe his frustration.
"I don't know what to say. It's depressing," he said. "Depressing to lose the championship again that way. Nothing I can say, mate, it's just depressing. I don't know what emotion to even feel right now."
Power took a 17-point lead over Ryan Hunter-Reay into the finale, and was racing deep in the field with the American as both drivers had handling issues with their cars early in the race.
Power said his Penske Racing team was urging him to get around Hunter-Reay, and understeer in his own car led him to drop down a lane on the track. There, while pushing, his car caught a seam and slipped out of his control.
"Just absolutely took me by surprise," he said.
He figured his race was over, and headed back to his team truck to change into street clothes and watch the rest of the race.
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