India, who entered the field as favorites after winning the previous match against Pakistan in the tournament, had a shaky start when fiery Pakistani left-arm fast bowler Mohammad Amir dismissed Indian opener Rohit Sharma for a duck.
India, looking to retain the Champions Trophy, went down without a fight as they collapsed to 158 all out and Amir felt his spell was crucial.
Their defence of the title they won in England in 2013 foundered against the team who began the campaign ranked below all other competing nations at eighth, and lived up to that billing in an opening group match in which they lost to their greatest rivals by 124 runs.
Amir, whose career was almost ended on the other side of London's River Thames by a ban and jail sentence for his involvement in a spot-fixing scan during a 2010 Test at Lord's, made a brilliant comeback after a back spasm forced him out of the semi-final victory over England.
The mix-up didn't hurt Pakistan in the long-term, as Fakhar's 114 from 106 balls allowed them to post a huge total of 4-338 from their 50 overs.
Amir took out all three of India's premier batsmen, bowled a maiden for figures of 6-2-16-3, then watched as his teammates mopped up.
"Cricket is not about doing well in every game that you play", reasoned India captain Kohli in his post-match news conference. I am one of his best mates and we really wanted him in the team.
"Once we put up a strong total, I was more than million percent sure India can't beat us today", said Zahra Mehmood, a housewife.
Kohli accepted his side had been second best as he acknowledged Pakistan's "amazing tournament".
The Times of India, for instance, chose to highlight India's 7-1 victory over Pakistan in a Hockey Word League game that was also being played in London on Sunday.
The tournament has seen Pakistan stage an unbelievable turnaround - from suffering an embarrassing loss against India in the first match to inflicting a ruthless defeat on the same opponents in the final.
Fakhar lofted Ravindra Jadeja over long-on for six and got to three figures by sweeping Ravichandran Ashwin to the boundary.
Pandya, however, briefly raised their spirits with a quickfire 76, reaching his fifty with three successive sixes off Shadab and hitting six maximums in all before he was run out. But just when it seemed that he was blazing towards a first worldwide century, he was run out after a mix-up with Ravindra Jadeja.
But the run-out Pakistan's openers had threatened arrived when Fakhar's failure to respond to Azhar's call saw the former ODI captain fall by a distance.