Having surprised top seed and reigning Olympic champion Carolina Marin in Saturday's semi-finals, Gilmour defeated home player Yvonne Li 21-10, 21-17 in the final.
The 27-year-old Glasgow-based shuttler took an early grip of the title match, finishing the first game with a fine cross-court backhand.
Li ran Gilmour closer in the second game, but the Scot's dominance of the net and powerful smashes from the back court were too much for her German opponent.
Marin suffers semi-final setback
After reaching the final of the Denmark Open two weeks ago, where she lost out to Japan's Nozomi Okuhara, Marin was widely expected to secure a tournament victory in Saarbrucken.
Her task was seemingly made easier by the withdrawal of second seed Mia Blichfeldt with the Dane suffering ongoing heel problems.
The Spaniard made smooth progress to the semi-finals, but went down in straight games to old rival Gilmour.
In eight previous meetings, Marin had won seven times including in the European Championships finals of 2016 and 2017.
But the Scot, seeded three, led 19-16 in the first game before Marin reeled off four consecutive points to go 20-19 in front.
Then it was Gilmour's turn to dominate, winning the next three points to take it 22-20.
Marin led 7-4 in the second game, but Gilmour dominated after that to run out a 22-20, 21-14 winner and score her second win against the Olympic champion.
Reacting to her defeat in Germany, Spain's first ever badminton Olympic gold medal winner is determined to stay positive.
Speaking in September, Marin told the BWF, "It was really, really tough, it was really hard, and right now it's still hard."
The 27-year-old from Huelva has made retaining her Olympic title in Tokyo her main goal for 2021.
Toma Junior Popov wins 2020 SaarLorLux men's singles
22-year-old French rising star Toma Junior Popov overcame Netherlands shuttler Mark Caljouw 22-20, 19-21, 21-14 to win the men's singles title after a gripping final.
The two evenly-matched contenders fought out long, exhausting rallies and battled for every point, Popov trying to control the pace of the game by slowing down between services and frustrating Caljouw.
In the end France's badminton promise delivered to take the BWF Super 100 title in Germany.
Saarbrucken doubles results
Before the women's singles final, Denmark's Alexandra Boje and Mathias Christiansen defeated Germany's Mark Lamsfuss and Isabel Herttrich 21-15, 19-21, 21-11, in the mixed doubles final.
Christiansen rolled his right ankle while stretching to return a shot after the start of the second set, but continued with great encouragement from the crowd and the Danish pair closed it out in the third set.
The men's doubles final was an all-Denmark affair, Jeppe Bay and Lass Molhede beat Daniel Lundgaar and Mathias Thyrri in straight sets 21-13, 21-15.
Another Danish pair made the final of the women's doubles but Freja Magn and Amalie Magelund lost out to Bulgarian sister act Gabriela and Stefani Stoeva.
The Stoeva sisters ran out comfortable winners 21-8, 21-11.