But the hosts were forced to come from behind after Nicky Forster prodded home Craig Fagan's header on 16 minutes.
Iwelumo headed an equaliser three minutes later and after the break he gave his side the lead from the penalty spot after he had won the kick himself.
The superb Iwelumo set up Jamie Cureton to score from seven yards before he sidefooted his third goal and then completed the scoring with a header.
Colchester boss Geraint Williams:
"However, Chris Iwelumo scored a great header and it was important that we really got stuck into them after the restart. The boys did that superbly.
"But the only P word I'm thinking of is points and not play-offs."
Hull manager Phil Parkinson:
"Colchester played very well and they can take a lot of credit. But I can't get concerned about the opposition, my worry is more with my own team.
"We just didn't do the simple things right and as a result we were just second best."
Colchester: Davison, Halford, Baldwin, Brown, Elokobi, Duguid, Jackson, Izzet, McLeod (Watson 73), Iwelumo (Guy 85), Cureton (Ephraim 85).
Subs Not Used: Gerken, White.
Goals: Iwelumo 19, 54 pen, Cureton 57, Iwelumo 66, 79.
Hull: Myhill, Ricketts, Coles, Turner, Delaney, Fagan, Welsh (France 59), Livermore, Elliott, Marney, Forster (Barmby 59).
Subs Not Used: Duke, Dawson, McPhee.
Booked: Delaney, Elliott, Marney.
Goals: Forster 16.
Att: 5,373
Ref: P Miller (Bedfordshire).