Jessica Simpson recently celebrated her 26th birthday -- and finalized divorce -- with close friends and family in Cabo San Lucas, Mexico.

People magazine reported that this year's birthday celebration for the singer varied greatly from her elaborate party last year, which featured over 150 revelers including her now ex-husband, Nick Lachey.

"They had sangria and Mexican food and sat around telling stories and dancing," one of the singer's friends said. "Jessica is the (happiest) she has ever been."

Yet the fun will likely be short-lived for the singer-actress, whose video "A Public Affair" debuts next week. Her newest film, "Employee of the Month, is scheduled to open Sept. 15.

Simpson is also scheduled to be the host of the 2006 Teen Choice Awards on Aug. 20, which will likely feature appearances by award nominees Lachey and his current girlfriend, Vanessa Minnillo, People said.