Veteran Blues striker Kevin Phillips made the most of being handed his first league start of the season by opening the scoring in the fourth minute, the 37-year-old meeting Sebastian Larsson's corner and unleashing an effort that Jussi Jaaskelainen could not stop going in.
Craig Gardner made it 2-0 just before the hour mark with a strike that crashed in off the post and although Johan Elmander's reply for Wanderers set up a tense finale, the hosts hung on for three vital points.
The win moves Alex McLeish's team, who had started the day 19th in the table, up five places, although they remain only two points above the drop zone.
Birmingham appeared keen to make amends for their 3-2 home defeat to Bolton in the FA Cup quarter-final just three weeks earlier and having made a lively start, they took an early lead.
Gardner won a corner with a deflected shot and Larsson's delivery skimmed over the head of Roger Johnson before falling to Phillips, who rifled the ball in off Jaaskelainen.
Gardner tried his luck from outside the box three minutes later but his drive went across goal and wide.
Almost immediately, Elmander had a chance at the other end on the turn which he was unable to get much power on, Ben Foster collecting the ball comfortably.
Daniel Sturridge then cut into the box after finding some space only to blaze off target.
Lee Bowyer volleyed over in the 25th minute having received a bouncing ball across the area from Larsson and the Sweden winger then teed up Gardner, who struck wide from distance.
Bolton looked dangerous whenever they broke forward and after Sturridge had made weak contact with a header towards goal, he fired in a far more potent effort from the edge of the box which Foster got down to block.
The England goalkeeper then held on to a deflected shot from Elmander before seeing Kevin Davies lift the ball over the bar.
The hosts were soaking up a lot of pressure, but had a great chance to make it 2-0 in the 39th minute when Cameron Jerome raced on to a long ball.
He appeared set to stroke it past Jaaskelainen, but fluffed his lines and the opportunity was wasted.
Wanderers hit back again, with Sturridge bringing two more saves out of Foster, the second particularly impressive on the part of the Blues stopper as he pushed away a low, fierce strike from the on-loan Chelsea frontman.
Jaaskelainen then jumped to catch a header from Johnson in first half stoppage time.
Birmingham thought they had doubled their advantage three minutes after the restart but were denied by the assistant referee's flag, Jaaskelainen parrying Phillips' shot, the ball being headed back across goal and Larsson having his effort disallowed for offside.
Sturridge continued to cause problems for the Blues with another shot from the edge of the area, but soon after it was Jerome shaping to shoot, Gretar Steinsson just getting in to nod the ball away.
From the resulting corner, Jerome set up Johnson, whose attempt was pushed around the post in fine style by Jaaskelainen.
Four minutes later, though, the hosts had a second goal as Gardner played a delightful one-two with Jerome before slamming the ball beyond Jaaskelainen and in off the post.
McLeish shuffled his pack, introducing Keith Fahey and David Bentley for Bowyer and Stephen Carr, but with 20 minutes remaining, Bolton got themselves back in the game.
Skipper Davies chested the ball down for Elmander, who leapt to connect with it and power into the net.
Wanderers boss Owen Coyle, who had already brought on Lee Chung-yong for Tamir Cohen, added further attacking options from the bench in the shape of Ivan Klasnic and Matthew Taylor for Martin Petrov and Fabrice Muamba, while McLeish did likewise by throwing on top scorer Nikola Zigic for Jerome.
Bolton's search for an equaliser showed little sign of bearing fruit until the dying moments, when Birmingham were once again indebted to the efforts of their goalkeeper.
Foster first tipped a backwards header from Davies behind for a corner, and then produced an even better save to push Steinsson's header over the bar.
There was time for one last nodded effort by Gary Cahill before the final whistle which Sturridge could not stretch to reach.