TORONTO, 26 July 2015, (AFP) - The 27-year-old Australian drained a 21-foot birdie putt on 18 to finish at 17-under 271 and beat two-time Masters champion Watson (69) by one stroke in the $5.8 million USPGA Tour event.
"There is no better feeling than coming down the wire and contending with these guys. It was back and forth all day," said Day. "This is the fourth win of my career and I am so proud to be the Canadian Open champion."
Crowd-favourite Hearn shot an even-par 72 and finished alone in third place, two strokes back of Day as he just missed out becoming the first Canadian to win the tournament in 61 years.
American Watson also closed with a string of back-nine birdies at the Glen Abbey Golf Club, rolling in four straight as both he and Day vaulted past third-round leader Hearn, who led for most of Sunday's round.
Day, who was coming off a tie for fourth at the British Open, becomes the third Australian to win the event, joining Greg Norman (1984 and 1992) and Nathan Green (2009).
Day rolled in a 12-foot putt for birdie on the par-four 17th to take the lead from Hearn at 16-under, and then sealed the win in emphatic style with his 20-footer on the 72nd hole.
"I am so glad I got that putt in. It just feels so good right now," Day said. "I am going to soak it in as much as possible."
Watson had a chance to force a playoff on 18 but his eagle effort from just off the green on 18 missed left.
Hearn, who was hoping to become the first Canuck to win the Canadian Open since Pat Fletcher in 1954, saw his birdie putt at the final hole rim out, costing him a share of second place.
"I didn't quite pull it off but I still gave myself a chance with three or four holes to go," said Hearn.
"I felt like I was in control. But I knew I needed to make some birdies today and even par wasn't going to get it done."
Two-time Canadian Open champion Jim Furyk came in fourth at 274 after closing with a 69.
Tom Hoge and Stewart Cink each carded 66s to tie for fifth at 275.
Canadian Adam Hadwin (68) and three Americans -- Matt Kuchar (69), Austin Cook (69) and Charley Hoffman (70) -- shared seventh place at 276
Day, of Beaudesert, Queensland, contended in both the British and US Open earlier this year in bids for his first major championship.
He bravely fought through vertigo while finishing ninth at the US Open in Tacoma, Washington, last month before his fourth-place finish at St. Andrews -- where he was one stroke out of the playoff won by Zach Johnson.
His dramatic birdie on 18 Sunday virtually assured him of the crown as it provided him with a two-shot lead over Watson and Hearn who were playing in the final group.
"I took the opportunity and to be able to do that gives me a lot more confidence going into the rest of the season," he said.
Day said he would take next week off because the last couple of tournaments have "been a big grind for me."
Leading final-round scores on Sunday in the USPGA Tour's Canadian Open (USA unless noted, par-72, a-amateur):
271 - Jason Day (AUS) 68-66-69-68
272 - Bubba Watson 68-67-68-69
273 - David Hearn (CAN) 69-64-68-72
274 - Jim Furyk 68-69-68-69
275 - Stewart Cink 68-73-68-66, Tom Hoge 70-70-69-66
276 - Charley Hoffman 71-66-69-70, Matt Kuchar 69-69-69-69, Austin Cook 68-70-69-69, Adam Hadwin (CAN) 74-67-67-68
277 - Rory Sabbatini (RSA) 72-69-69-67, Ricky Barnes 68-70-68-71, James Hahn 71-68-69-69, Michael Putnam 71-65-68-73, Erik Compton 66-69-71-71, Chad Campbell 67-63-75-72, Daniel Summerhays 73-69-68-67