This was the 31-year-old Swiss great's sixth Halle title and the 77th win of his career, but first since Cincinnati on the eve of the US Open in 2012.
His 77th title also saw him draw level with John McEnroe in third position in the all-time career titles list.
After losing the opening set, the former world number one battled back to preserve his perfect record over Youzhny in 15 meetings in over two hours of play.
"Winning solves everything," said Federer who will be chasing a record eighth Wimbledon title from next week.
"I am satisfied with my game, confident, fresh and excited about what lies ahead," he said.
"There's always a few things I can work on but I can think about that between now and the start of Wimbledon."
For Federer, beaten by Rafael Nadal in his only previous final appearance of 2013 on the clay in Rome and brushed aside by Jo-Wilfried Tsonga in the French Open quarter-finals, this was the ideal preparation ahead of his Wimbledon defence.
The top seed, who overcame veteran German Tommy Haas in Saturday's semi-final, was thrilled to finally get off the mark for the year.
"Mikhail has produced a great tournament, that's why I'm so happy to have won," Federer said.
"I had to fight hard to remain in the race in the second set," he said.
"I served well (he produced 12 aces) and that's what saved me today."
Federer missed five break points in the first set, four of them coming in the opening game, before coming off second best in the tie break after one hour of play.
But he fought back to level the encounter against the Russian, going on to win the match with a love game on his service.
Federer had won this grass court title four years in succession from 2003 to 2006 and again in 2008.
Sunday's win was his 13th trophy on grass.
Federer, who now has a 43-5 career record at Halle, had been in impressive form at the tournament with a 39-minute, 6-0, 6-0 win over German qualifier Mischa Zverev in the quarter-finals, only the second double-bagel of his career.
He then saw off defending champion Tommy Haas in a tight three-setter in the semi-finals.
"To lose the first set twice and still win, it's a great feeling," said Federer.
Youzhny had reached the final by beating three seeded players -- Kei Nishikori, Philipp Kohlschreiber and then Richard Gasquet, all of them in straight sets.
"I continue to improve my game," said the 31-year-old Russian.
"Tennis changes every year and I have to change with it if I am to stay at the top."