Bhullar (68-67-68-65) saw it home with a sublime and error-free final round effort of seven-under 65 that took his tournament total to 20-under 268.
The 34-year-old Gaganjeet thus sealed his 11th international win and 10th title on the Asian Tour. The Indian also became the first player to register three wins at the Indonesia Open following his previous successes at the event in 2013 and 2016.
India's Rashid Khan (68-70-64-68), a two-time winner on the Asian Tour, shot a last round of 68 to enjoy a tied second finish at 18-under 270 along with Englishman Steve Lewton who carded a 64 on Sunday.
Khan had started the day in front with Thailand's Atiruj Winaicharoenchai but the strapping Bhullar was unstoppable and a man on a mission, making three birdies on the front, and four on the back - which included three on the trot from the 13th.
Bhullar showed no sign of Sunday nerves and put on a putting masterclass, holing brilliant birdie putts and crucial par saves, to record his first international victory since 2018. He has won more titles on the Asian Tour than any other player from his country.
The six-foot tall Bhullar, who originally hails from Kapurthala in Punjab, said, "I played like a champion tee to green and gave myself so many birdie opportunities. I was riding high on confidence and hit the ball really well. It was a great week, I had a lot of positive memories having won this tournament two times previous, that was definitely on my subconscious mind. The goal was just to go out there and give my 100 percent."
Indonesia has been a happy hunting ground for Gaganjeet as he has secured four titles in the country including his first win on the Asian Tour back in 2009. Pondok Indah Golf Course too has been a favourable venue for Bhullar since he won his last Indonesia Open title in 2016 at the same course.
Gaganjeet now joins an elite group of players who have won a National Open in Asia at least three times. The list includes Peter Thomson, Hong Kong Open and Indian Open; Jyoti Randhawa, Indian Open; Adam Scott, Singapore Open; Jumbo Ozaki and Tommy Nakajima, Japan Open; Lu Liang-Huan, aka Mr Lu', Philippine Open and Taiwan Open; and Miguel Angel Jimenez, Hong Kong Open.
"This is my first win after becoming a father and I would like to dedicate this win to my 11- month-old daughter. Also, after over two difficult years because of COVID it's just amazing the Asian Tour is back in this wonderful country. The support for me here has been incredible," added Bhullar, who has now climbed from 24th to 10th position in the Asian Tour Order of Merit after pocketing US$90,000 for his victory.
Rashid Khan made up ground over the closing holes with four birdies on the homeward stretch having started with nine straight pars.
Rashid said, "I couldn't make any birdies on the first nine holes, so it was a little difficult for me to come back after that. I had my first birdie on the 10th so I got thinking that I can make a few more."
Khan's joint runner-up finish moved him up from 50th to 27th place in the Asian Tour Order of Merit.
Ajeetesh Sandhu finished as the third Indian in the top-20 as he claimed tied 19th place at 11-under 277.
Fifth-seeded Sindhu had to fight it out against Japan's Aya Ohori as she came from a game behind to win 11-21, 21-15, 21-15 in a match that lasted almost an hour.
In the men's singles event, world no 9 Kidambi Srikanth found it relatively easy as he went past Japan's Kenta Nishimoto 21-14, 21-13 in the contest that lasted for 38 minutes.
Earlier on Tuesday, India had a good opening day as two doubles pairs entered the second round of the competition. The men's doubles pair of Satwiksairaj Rankireddy and Chirag Shetty defeated Goh Sze Fei and Nur Izzuddin 21-19 18-21 21-19 in their opening match. The world no. 20 Indian pair will face Indonesian top seeds Marcus Fernaldi Gideon and Kevin Sanjaya Sukamuljo next.
In the mixed doubles event, Pranaav Jerry Chopra and N. Sikki Reddy edged out Netherlands' Robin Tabeling and Selena Piek 25-23, 16-21, 21-19 to set up second-round contest against top seeds Zheng Si Wei and Huang Ya Qiong of China.
However, there was disappointment in the women's doubles event as Commonwealth Games bronze medallists Ashwini Ponnappa and N. Sikki Reddy went down 20-22, 22-20, 20-22 to Malaysian combination of Vivian Hoo and Yap Cheng Wen.
Fifth-seeded Sindhu had to fight it out against Japan's Aya Ohori as she came from a game behind to win 11-21, 21-15, 21-15 in a match that lasted almost an hour.
In the men's singles event, world no 9 Kidambi Srikanth found it relatively easy as he went past Japan's Kenta Nishimoto 21-14, 21-13 in the contest that lasted for 38 minutes.
However, Prannoy and Praneeth crashed out of the men's singles competition. Praneeth, who had made it to the Swiss Open final this year, went down 15-21, 21-13, 10-21 to Hong Kong's Wong Wing Ki Vincent. On the other hand, despite a good show, Prannoy couldn't get past China's second seed Shi Yu Qi as he lost 21-19, 18-21, 20-22 in the 71-minute contest.
There was also disappointment for the mixed doubles pair of Satwiksairaj Rankireddy and Ashwini Ponnappa as they too lost 13-21, 11-21 to Winny Oktavina Kandow and Tontowi Ahmad of Indonesia in 28 minutes.
Seven months after becoming the first Indian to win the season-ending BWF World Tour Finals in December, Olympic silver medallist Sindhu had an opportunity to finally lay her hands on another crown only to squander, losing 15-21 16-21 to the Japanese in a lop-sided summit clash that lasted 51 minutes here.
Playing her first final of the season, Sindhu looked a bit anxious and failed to match the brilliance of the 22-year-old Yamaguchi, whom she had beaten in the last four meetings.
This was Sindhu's fifth loss to Yamaguchi in 15 meetings. The last time the Indian lost to the Japanese was at the semifinals of the All England Championship last year.
The defeat added to Sindhu's list of runners-up finishes, which include silvers at the World Championships, Asian Games, Commonwealth Games, Thailand Open and India Open last year.
It was Yamaguchi's third title of the season after claiming crowns at German Open and Asian Championship.
Prior to this in 2019, Sindhu reached the semifinals of Singapore Open and India Open.
Sindhu had a forgettable start in the opening game as she lagged 0-3 but soon the Indian controlled the proceedings, making Yamaguchi run across the court and finishing with her precise returns to take a 5-4 lead.
Yamaguchi took the lead at 7-7 when Sindhu went wide. But the Indian managed to grab a three-point advantage at the break after the Japanese went wide twice.
Yamaguchi then displayed good retrieval skills and grabbed three straight points when Sindhu miscued her strokes.
A delicate net short took Yamaguchi to 12-13 but she again missed the line. The Japanese levelled par at 14-14 when the Indian went long.
Yamaguchi attacked Sindhu's long backhand corner and soon eked out a 16-14 lead. An attacking game helped the Japanese to widen the gap as Sindhu once again sent a shuttle wide.
A lapse in backhand defence and then one shot going long from Sindhu gave Yamaguchi six game points. The Indian saved one before a smash to a return of serve helped the Japanese to seal the opening game.
In the second game, Yamaguchi made a good start again, moving to a 4-1 lead before stretching it to 8-5 with Sindhu struggling to control the shuttle. The Indian won a few points because of unforced errors by Yamaguchi.
The Japanese sent one at Sindhu's body during a flat exchange before entering the interval with a 11-8 advantage, when the Indian hit out.
Sindhu unleashed a cross court smash and pushed one at the backcourt to leave Yamaguchi off balance, but the Japanese rode on the Indian's unforced errors to move to a 15-10 lead.
At 15-11, the duo played a 51-shot rally that ended with Sindhu making a judgement error.
Two unforced errors by Yamaguchi took Sindhu to 13-16 before she moved to 15-18. After a treatment on her right knee, Yamaguchi was back on the court and produced a smash to make it 19-15.
The Japanese held four match points when Sindhu went long and she sealed it with another smash to claim the biggest title of her career.