South Africa's Lategan, who lost his lead on Thursday and was trailing Al-Rajhi by over six minutes at the start of stage 12 in Shubaytah, made a fast start but was unable to catch up with the Saudi Arabian in the shorter 61 km (38 miles) special.
The off-road endurance event, which moved to Saudi Arabia in 2020 after a decade in South America, was originally held between Paris and the Senegalese capital Dakar. It moved out of the Europe-to-Africa route format after the 2007 edition over security concerns.
Overdrive's Al-Rajhi, who became the first Saudi Arabian to win the Dakar Rally, received a rousing welcome at the finish line with teammates lifting him on their shoulders.
"I'm very, very happy to do it. It's not an easy race, it’s the toughest one that I’ve done in 11 years," Al-Rajhi said.
"For sure, we've made a lot of records today. The first Saudi driver to win and also in the last 25 years no private team beat a factory team but we did it this time."
Five-time Dakar winner Nasser Al-Attiyah finished second on the day to take fourth place overall. Brazilian Lucas Moraes, who fell out of the championship race after losing nearly three hours on Saturday, won the stage finishing 33 seconds ahead of Qatar's Al-Attiyah.
In the motorcycle category, Sanders left second-placed Spaniard Tosha Schareina eight minutes and 50 seconds behind in the overall rankings to become the second Australian to win the Dakar title after Toby Price.
“When I came out of the dunes ... I could see the bivouac and I just got instant chills through my whole body, I was super nervous. I couldn’t believe it. All the emotions started coming through and I could see the finishing line," Sanders said.
"It’s the biggest race in the world motorbikes and off-roading. To win the six-day international enduro and now the Dakar, it’s just ticked off all the goals for my career and everything I’ve wanted to achieve."
Second-placed Schareina congratulated Sanders on his victory.
"I’m super happy for Daniel, he has done a great job and had a great two weeks. I think the 10 minutes more or less he took on the first day allowed him to control the race from then," the Spaniard added.
Defending champion Ricky Brabec finished fifth overall, with the American trailing Sanders by over 12 minutes.