The 55-year-old Hanefeld, a PGA Life member from Acton, Mass., shot a 3-over 75 -- the highest closing round by a winner in the showcase event for senior PGA pros -- at Creighton Farms to finish at 6-under 282. Martin, from Wellington, Fla., had a two-stroke lead after 16 holes, but he bogeyed the final two holes for a 74.
"It wasn't pretty," said Hanefeld, also the 2008 winner.
Hanefeld, who set the tournament 36-hole record at 11 under and shot a 74 on Saturday to take a two-stroke lead into the final round, bogeyed four of the first five holes Sunday.
"I really don't feel like I won a golf tournament, but golf is a wacky game," Hanefeld said.
Hanefeld's erratic round included a birdie at the fifth hole, then bogeys at Nos. 8, 12, 13, 15 and 16. He hit a 96-yard wedge approach at 18 that landed beyond the hole and spun back within 18 inches.
Martin's tee shot at 18 nestled into an awkward position in the left fairway bunker. He blasted out, then hit a hybrid from a poor lie in the rough, before sailing a wedge approach over the green. He chipped back to 4 feet, made his bogey putt and watched as Hanefeld made the winning birdie putt.
"Making birdie on the last hole was great, but there wasn't too many highlights for me today," said Hanefeld, who earned $20,000 from the $285,000 purse. "But to win is obviously very satisfying. Kenny played really, really well up until the last few holes and I gave a lot back to him."
The 52-year-old Martin, the PGA teaching professional at Village Golf Club in Royal Palm Beach, Fla., said he didn't check his position in the championship until he shook hands with Hanefeld on the 72nd green.
"I actually had no idea where we stood, and I wanted to keep it that way," Martin said. "I hit a great shot on 15, and knew that Kirk was making bogey. To be honest, I wasn't thinking about anything but the next shot. There was a lot of waiting between shots and I was trying to find my rhythm.
"I was stuck in the bunker at 18, then had a horrible lie, hit the wedge shot thin and made a heck of a bogey. Then, I found out at the end that he won by a shot!"
Darrell Kestner of Glen Cove, N.Y., closed with a 68 to tie for third at even par with Craig Stevens of Dallas, Ga. Stevens finished with a 75. Fred Holton of Montgomery, Ala., and Tim White of Midlothian, Va., tied for fifth at 1 over. Holton had a 77, and White shot a 77.
The top 35 finishers earned spots in the Senior PGA Championship in May at Harbor Shores in Benton Harbor, Mich. The top five received exemptions into the final stage of the 2011 Champions Tour Q-school.