Newgarden had won three consecutive races at World Wide Technology Raceway and four overall at the track.
McLaughlin earned his fifth career IndyCar pole ahead of the race but started in the No. 10 position due to his penalty. He finished fifth.
McLaughlin is one of six drivers who were penalized for unapproved use of a fifth engine this season.
Qualifying was pushed back to Sunday morning after rain kept drivers off the track until 6 p.m. Saturday night.
CHASE FOR THE CHAMPIONSHIP
Dixon’s victory pulled him to within 74 points of Chip Ganassi Racing teammate and IndyCar leader Palou with two races remaining. Dixon is Palou’s only challenger for the season title as Newgarden dropped to 125 points behind Palou falling out of championship contention.
UP NEXT
The IndyCar series returns to action Monday NZT, with the Bitnile.com Grand Prix of Portland. Both of the final two races will be held on road courses.