Three observations of the 5.54 s transient anomalous X-ray pulsar XTE J1810-197 obtained over 6 months with the Newton X-ray Multi-Mirror (XMM-Newton) mission are used to study its spectrum and pulsed light curve as the source fades from outburst. The decay is consistent with an exponential of time constant similar to300 days but not a power law as predicted in some models of sudden deep crustal heating events. All spectra are well fitted by a blackbody plus a steep power law, a problematic model that is commonly fitted to anomalous X-ray pulsars (AXPs). A two-temperature blackbody fit is also acceptable and better motivated physically in view of the faint optical/IR fluxes, the X-ray pulse shapes that weakly depend on energy in XTE J1810-197, and the inferred emitting areas that are less than or equal to the surface area of a neutron star. The fitted temperatures remained the same while the flux declined by 46%, which can be interpreted as a decrease in area of the emitting regions. The pulsar continues to spin down, albeit at a reduced rate of (5.1 +/- 1.6) x 10(-12) s s(-1). The inferred characteristic age tau(c) = P/2(P) over dot approximate to 17,000 yr, magnetic field strength B-s approximate to 1.7 x 10(14) G, and outburst properties are consistent with both the outburst and quiescent X-ray luminosities being powered by magnetic field decay, i.e., XTE J1810-197 is a magnetar.