Gluon fragmentation represents the dominant source of high energy prompt quarkonia at hadron colliders. Fragmentation approximations break down, however, when a quarkonium's transverse momentum becomes comparable to its mass. In this paper, we identify a large class of color-octet diagrams that mediate quarkonia production at all energies and reduce to the dominant set of gluon fragmentation graphs in the high $p_\perp$ limit. They contribute to quarkonia differential cross sections at the same order as color-singlet diagrams and bring theoretical predictions for Upsilon and Psi production at the Tevatron into agreement with experimental measurements. Using recent CDF data, we extract numerical values for bottomonia and charmonia color-octet matrix elements which are consistent with NRQCD scaling rules. We also find that quarkonia generated via the color-octet mechanism are strongly polarized at low as well as high energies. Spin alignment measurements can thus test the color-octet quarkonia production picture.

23 pages, harvmac, 11 uuencoded figures