1946 he divorced from Alice and married the Venezuelan designer and artist Luchita Hurtado, whom he had met in New York through his friend Isamu Noguchi. Hurtado moved to Mexico in 1947 to live with Paalen and together they explored the ancient culture of the Olmec, about which Paalen later published a widely respected article in the French art magazine Cahiers d’art. Paalen radicalizes the assumption of his friend and colleague Miguel Covarrubias, that the Olmecs were a culture succumbed and (after hundreds of war-years) finally wiped out by the aggressive Maya civilization, comparing the Olmecs to the ancient European matrilinear civilizations, which underlay invasive and more aggressive patriarchal civilizations some 3000 years ago. Paalen´s thesis about the matrilinear social-structure of the ancient societies of Mesoamerica, which he documented with considerable support from his own research, was never substantially challenged and strongly influenced such artists as Alice Rahon, Remedios Varo and Leonora Carrington in their archaist and feminist themes. His ideas still live on in the archaeological and artistic discourses, the most prominent popular example of recent times being Mel Gibson´s cinematic opus Apocalypto).
In 1948 one of the two children, Luchita had brought from her former marriage into the household Paalen´s, died in Mexico of Polio. Paalen decided to move to San Francisco with his new family, where he worked with Gordon Onslow Ford and Lee Mullican in a newly formed association, the Dynaton group. They settled in Mill Valley and had solo shows in the San Francisco Museum of Art as well as a group show at Stanford University Art Gallery, where he also lectured parts from the major essay on his new concept of space, he had worked on the last years. It was published in occasion of the DYNATON exhibition in San Francisco Museum of Art in 1951 as a catalogue. Paalen´s ongoing desire to go back to Mexico and rebuilt the link to Breton in Paris led to a divorce from Luchita Paalen, who decided to live with Lee Mullican. Back in Mexico Paalen organized 1951 a longer stay in Paris. Together with his new fiancée, the American painter Marie Wilson, Paalen lived for the next 3 years in Kurt Seligmann´s atelier-building in the Impasse Villa Seurat in Paris, built by André Lurçat. He reconciled with Breton, spent most of the summers in Breton´s house in Saint Cirq La Popie, participated at the invention of various surrealist games, like Ouvrez-Vous? and L’un dans l’autre and painted a considerable corpus of lyrical-abstract paintings, which were exhibited at Galerie Pierre (1953) and Galerie Galanis-Hentschel (1954). One of the four numbers of Breton´s magazine Medium – Communication Surréaliste is dedicated to Paalen. After travelling through Germany in the summer of 1954 he went back again to Mexico.
Paalen´s last years in Mexico are characterized by increasing health problems, mainly originated in his bipolar (manic-depressive) disposition. With the help of his friends and patrons Eva Sulzer and Gordon Onslow Ford he acquired an old house with studio in the small town Tepoztlán in Morelos, where he mainly lived and worked during the last years of his life. Paradoxically Paalen produced a number of masterly works towards the end of this last period, as well as theatre plays and short stories, which reflect ironically his ambivalent state of mind and growing depressions. His passion for Olmec sculpture and artefacts implicated him into adventurous expeditions into the wilderness of Yucatán, collecting and trading pre-Columbian art to an always growing US market. Rumours of Paalen having been involved in illegal looting of archeological sites in Yucatán inspired the American author and theologian Arthur A. Cohen to his novel Acts of Theft (1980). As expert and inspirator Wolfgang Paalen assisted the American filmmaker Albert Lewin for his film The Living Idol. 1958 he received André Pieyre de Mandiargues and Octavio Paz in Tepoztlán, who both wrote texts on Paalen after his suicide. In the night of 25 September 1959 Paalen left his hotel room in the Hacienda San Francisco Cuadra in Taxco, where he sometimes stayed during his depressions, and walked up the hill. The following day he was found dead with a gunshot to his head