Word number 15 and top seed Pallikal defeated her second seeded opponent 11-9 11-7 11-4 in the final.
Before entering the final, the 21-year-old Indian overcame a tough challenge from British fourth seed Sarah-Jane Perry 11-8 6-11 16-14 11-3 in the semi-final.
She also beat qualifier Laura Pomportes and seventh seed Amanda Landers-Murphy in straight games, en route to the final.
After losing the tight first game, world No. 19 Chan altered her approach as she opted to attack more.
The tactical switch worked well in the opening stage of the game, before Pallikal adjusted her play to combat her opponent, who is world number 19.
Some timely winners extended the top seed's lead to two games, and a continuation of the form saw her run out a 6-0 lead in the third game. Chan was unable to combat the increased pressure from the Indian and was only able to scrape back a few points before Pallikal closed out the contest.