Mallon began the day one stroke behind Matthew, who joined the LPGA Tour in 1995 and did not break through for a victory until last year when she won the Hawaiian Ladies Open.
The wind was a major factor for most of the weekend at the 6,435-yard Sumerlea Golf and Country Club course.
As a result, Mallon played cautiously with no bogeys and two birdies through the first 11 holes. She settled for bogeys on 12, 13 and 16, reaching the clubhouse at 4-under-par 284.
Matthew, meanwhile, unraveled on the back nine, beginning with a triple-bogey on No. 12. She bogeyed Nos. 13, 15 and 18, finishing with a 77 and second place at 286.
It was the 14th career victory for Mallon, whose best performance this season was tie for eighth at the Women's British Open. Mallon, who won this event in 2000, captured a tournament for the first time since the 2000 du Maurier Classic and earned $180,000.
Defending champion Annika Sorenstam played a European event and was not entered.