Bale made his mark on another Champions League final with a magnificent overhead kick to put Real 2-1 up after 64 minutes.
Liverpool had already suffered the devastating blow of losing top scorer Mohamed Salah midway through the first half - with a shoulder injury sustained in a challenge with Real Madrid captain Sergio Ramos - when calamity struck for Karius.
Six minutes after half-time, the German inexplicably threw the ball against Karim Benzema, who was not even challenging with urgency, and watched in horror as the ball rolled behind him into the net.
Liverpool recovered from the shock to equalise through Sadio Mane before Bale stepped off the bench to score his wonder goal.
There was to be no comeback from Liverpool this time and Karius's misery was complete when he fumbled Bale's hopeful 30-yard shot behind him to seal Real's win.
It sealed Real's record 13th win in this competition, and their fourth in five seasons to give coach Zinedine Zidane this third triumph in three years.
For Liverpool manager Jurgen Klopp, it was disappointment again - he lost his third successive final since arriving at Anfield, having suffered defeats in the League Cup and Europa League finals of 2016.
Real Madrid has become the first team to win the European Cup/Champions League in three successive seasons since Bayern Munich between 1974 and 1976.
Calamity for hapless Karius
When the story of this Champions League final is told from a Liverpool perspective, it will be the tale of Karius' nightmare alongside that of Salah's injury.
The 24-year-old German has been shown huge faith by Klopp, who brought him in from Mainz and made him first choice ahead of Simon Mignolet.
He has never fully convinced and on this, the biggest night in Liverpool's recent history, he had the sort of night to leave you wondering how he will rebuild his Anfield career.
Loris Karius made more errors leading to goals in the final against Real Madrid (two) than he had in his previous 32 competitive appearances for Liverpool
Karius inexplicably threw a clearance against Benzema for Real Madrid's opener before fumbling Bale's speculative, long-range effort into the net to snuff out any hopes of a comeback.
The keeper lay flat on the turf at the final whistle, being consoled by Real Madrid's players before apologising tearfully in front of Liverpool's fans.
Klopp clearly rates Karius but there are too many holes in his technique. That, along with his temperament, must be questioned after a complete horror show here in Kiev.
Salah setback shifted the balance of power
Ronaldo, who went off early in the Euro 2016 final with a knee injury, comforted Salah when he was substituted
The whole emphasis of the final shifted as Salah slumped to the turf for a second time after realising he could not carry on with the shoulder injury sustained in the tangle with Ramos.
Liverpool had started well and Real's deep defending hinted at the apprehension they were felt faced with the attacking trio of Salah, Roberto Firmino and Sadio Mane.
As Salah left the pitch, inconsolable and in tears, even Liverpool's fans were temporarily hushed and it was clear Real had suddenly been given fresh impetus.
Liverpool, with the magnificent Mane leading the fight, showed commendable heart but they had been robbed of their world-class talisman who, before his substitution, had scored 33% of their goals in all competitions.
It will be the great unknown as to what might have happened had Salah stayed on but there is no question his departure was a savage blow to Liverpool and a lift for Real Madrid.
Bale bounces back
Gareth Bale scored just two minutes and two seconds after coming off the bench. It was the second-fastest by a substitute in a Champions League final, after Lars Ricken for Borussia Dortmund against Juventus in 1997.
Bale's Real Madrid future has been under constant scrutiny this season - a quirk at a club that lives by its own rules.
The Welshman did not even make the starting line-up here and only emerged just after the hour - but within two minutes he scored one of the great Champions League goals, an overhead kick that was a triumph of athleticism and technique, and begged the question as to how Real could even contemplate life without him.
As for Bale's second goal, make no mistake - when he took on that long-range shot, he would have been street-smart enough to know Karius was living on his nerves after his earlier error.
Bale delivered a reminder, if it were needed that he remains a world-class player.
It may just have been an expensive night for suitors such as Manchester United as his display here will have added millions to any potential transfer fee.
When asked about his future after the game, Bale told BT Sport: "I need to be playing week in, week out and that has not happened this season.
"I had an injury five, six weeks in but have been fit ever since. I have to sit down with my agent in the summer and discuss it."
Zidane the history man
Bob Paisley, Carlo Ancelotti and Zinedine Zidane (left to right) are the only managers to win the European Cup/Champions League three times
Zinedine Zidane has joined Liverpool's Bob Paisley and his Real Madrid predecessor Carlo Ancelotti in the elite ranks of managers to win this tournament three times - but added extra gloss by becoming the first to win it in three successive seasons.
Zidane has often been damned with faint praise about his abilities and record, despite his Champions League invincibility, by those who claim he simply keeps an outstanding team on track but he makes a nonsense of that with his tactical approach, handling of world-class players (and world-class egos) and a very happy knack of making decisive substitutions.
Three Champions League wins in three seasons ends all argument about his greatness as a coach. He is in charge of a team who know how to get the job done.
More about: football