Tony McCoy's mount, who went off at 9-1, had finished third in 2009 but was pulled out of the race last month with a muscle problem.
But he was passed fit last week and looked impressive once he took the lead turning for home.
Khyber Kim (7-1) battled well for second with Zaynar (15-2) third.
Binocular had struggled this season with defeats in the Fighting Fifth at Newcastle and the Christmas Hurdle at Kempton and after failing to impress at Sandown in February, was ruled out of the Cheltenham reckoning.
But the six-year-old, owned by Irish millionaire JP McManus who also owned three-time winner Istabraq, put in a couple of impressive pieces of work last week at trainer Nicky Henderson's Seven Barrows yard in Berkshire.
He was always travelling sweetly under McCoy, taking command between the last two hurdles to win by three-and-a-half lengths for the Antrim man's 22nd Festival success.
"When I schooled him last week it was the first time he has hurdled like we know Binocular can - like a champion hurdler," he said afterwards.
"He didn't have a good build-up this year. He has not been hurdling well all year, he's just done something funny every time.
"I'm so happy for JP. This is better than any feeling I have had from the horse. It's hard to win here and this is everything."
Henderson was also delighted that his hard work had paid dividends on the big stage.
"It hasn't been an easy passage this year. When he was beaten last year, we said he'd come back and AP [McCoy] said he would win it," he said.
"We were actually nine-tenths taking him out and we said he wouldn't run. But we did a lot of work. We've got a fantastic team and we ironed out a few things."
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