Alvaro Morata headed in Isco's cross to score on his first league start of 2017 in the first half of a low-key match which produced few scoring opportunities after the hosts made seven changes to their team.
Madrid received an added boost when Bale returned from three months out with an ankle injury as a substitute to cap a late counterattack and seal victory, Isco again with the assist.
Zinedine Zidane's men have now won eight straight league games at the Santiago Bernabeu as they continued their push for a first title since 2012.
Espanyol, meanwhile, have failed to beat Madrid in 19 league meetings – their worst run against any team - and stay ninth after suffering a second consecutive league defeat.
Pepe – in for the injured Sergio Ramos – squandered the first chance of the match, heading wide from Toni Kroos' corner.
The hosts dominated possession but did not threaten again until a rapid spell of attacks just after the half-hour mark, Cristiano Ronaldo firing wide after Lucas Vazquez had capitalised on a mistake from Pablo Piatti to create the shooting opportunity.
Morata had the ball in the net a few moments later, but was denied by an offside flag after he had strayed beyond the last defender from Kroos' low cross.
But Morata scored one that did stand after 33 minutes, the Spain forward confidently heading into the bottom corner from six yards after Isco was allowed far too much time to float in a cross from the right.
Morata then lashed another chance wide following Nacho's delivery as Madrid went into half-time on top.
Ronaldo struck a poor free-kick straight into the wall from 25 yards early in the second half, while Kiko Casilla was tested for the first time at the other end when he beat away substitute Hernan Perez's near-post strike.
Morata created Madrid's next opportunity, making good ground down the left and crossing for a stretching Ronaldo to head over.
Bale was brought on in place of Morata in the closing stages and sealed the win with seven minutes remaining.
Isco was again the creator as Madrid launched a rapid counterattack, feeding Bale to produce a calm finish into the far corner.
Madrid were untroubled from then on, with Ronaldo denied a late penalty due to an offside call as Espanyol's run of scoring in eight straight league games was brought to an end.