Touzaint's victory is worth £60,000
Nicolas Touzaint and Hildago de l'Ile became the first French partnership to triumph in the Badminton Horse Trials since the event started 59 years ago.
"It's always been my dream to win here, but I could not imagine it would ever happen," said the 23-year-old.
Devon's Lucy Wiegersma ran him a close second, finishing 1.4 penalties adrift on Shaabrak after both her horse and Hildago made one showjumping error.
Zara Phillips was 16th on Glenbuck and 19th on Ardfield Magic Star.
Touzaint who won the European title in 2003 and 2007 on Galan de Sauvagere, had suffered a ducking in the Lake with Hildago on their first Badminton attempt 12 months ago.
But he rode a much tighter line this time, making sure the fences came up on the right stride.
Wiegersma, 31, who won the British National title with her 14-year-old in 2006, put herself in the running for a place at the Olympics.
"My dream has always been to reach the Games," she said.
William Fox-Pitt, third on his 2005 Burghley winner Ballincoola, was delighted to get so close with one horse but disappointed to finish down in 18th with 2004 winner Tamarillo.
The 16-year-old lost his chance of a repeat success after an unexpected cross country run-out. Although now qualified for Hong Kong, he may not be in the selectors' sights.
Cheshire rider Polly Stockton and Tom Quigley dropped from third to sixth with three showjumping mistakes but Stockton, and fifth-placed Sharon Hunt on Tankers Town, could be under Olympic consideration.