Roughly chop the yellow onion and jalapeño pepper; peel the garlic cloves.
In a food processor, combine diced tomatoes (undrained), chopped onion, jalapeño, garlic, and fresh cilantro.
Add fresh lime juice, ground cumin, salt, and granulated sugar (if using).
Secure the lid and pulse to your desired consistency, pulsing only a few times for chunkier sauce or longer for a smoother texture.
Taste and adjust: add more lime juice for brightness, extra jalapeño for heat, or a pinch of salt if needed.
Transfer the sauce to a bowl or clean jar, cover, and refrigerate for at least 30 minutes to let flavors meld.
Serve with chips, tacos, eggs, grilled meats, or store in an airtight container in the fridge for up to one week.