After being asked to bat first, Pakistan looked steady during the initial proceedings as both the openers were playing rather sensibly.
India was then routed for 158 in the 31st over.
Mohammad Amir had Rohit Sharma lbw in the first over and the king of the ODI chase, Virat Kohli came in at 0-1 but instead of steadying the ship he was dropped after just eight balls and instead of taking that reprieve he was out one ball later.
Pakistan have managed to bounce back in the tournament, trouncing South Africa and Sri Lanka in the group stages and England in the semi-finals to book a berth in the final.
A fiery Amir dented India's top batting order.
The last 10 overs netted 91 runs, giving Pakistan's bowlers - the team's strength - an impressive total to defend in a bid to win its first global ODI title in 25 years.
After the first game, played against the team they can not lose to, Pakistan were dead and buried, with the only question being which airline they would use to book their flight back home.
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So after coming into the tournament as rank underdogs - they entered just edging past West Indies as the lowest seed - Pakistan end up as the victor of the Champions Trophy 2017.
India will feel aggrieved as Fakhar, on three, was caught by wicketkeeper Mahehdra Singh Dhoni off a Jasprit Bumrah no-ball and the 27-year-old left-hander took full advantage to reach his first worldwide century.
Pakistan's margin of victory is their biggest by runs in 129 ODIs against India.
Hafeez struck an unbeaten 57 from 37 balls and Babar Azam amassed 46 as Pakistan chalked up 338 - a total deemed eminently gettable on a run-filled surface.
Leg spinner Shadab Khan trapped Yuvraj Singh right in front but the umpire denied Pakistan's appeal.
Pakistan all-rounder Mohammad Hafeez said: "It's a great team effort. Hopefully we can have a good performance".
Fakhar left to a standing ovation and handed the baton to Babar, who saw Shoaib Malik hole out off the economical Bhuvneshwar Kumar before failing to clear the rope himself, caught off Kedar Jadhav at long off.