Gambang bread is a traditional no-yeast Indonesian bread characterized by its palm sugarlike brown colour, dense texture, and spice taste. Coconut dregs are high in dietary fiber but easy to spoil, so blanching is an effective way to prolong the coconut dregs' shelf life. This study investigated the effects of the blanching method and time on yield, water content, fat content, and dietary fiber content of coconut dregs powder. Moreover, the effects of coconut dregs powder substitution ratio and pectin concentration on the microstructure and physical characteristics of the bread (expansion volume and hardness) were studied. Hot water blanching produced coconut dregs powder with lower yield and fat content, as well as higher moisture and dietary fiber content than steam-blanched coconut dregs powder. Blanching time only affected dietary fiber content. 10 mins of blanching produced coconut dregs powder with higher dietary fiber content than 5 mins of blanching. Hot water blanching treatment for 10 mins was chosen as the best treatment. This treatment produced 43.12±0.64% coconut dregs powder. Moreover, the chemical characteristics of chosen coconut dregs powder were 5.40±0.01% water, 34.10±1.56% fat, 3.73±0.1% protein, 0.45±0.02% ash, 55.53±1.28% carbohydrate, and 73.90±0.02% dietary fiber. Higher substitution of coconut dregs powder increased hardness and decreased the expansion volume of gambang bread. Meanwhile, adding pectin significantly reduced the hardness of gambang bread. The best gambang bread was obtained from 10% substitution coconut dregs powder and 0.5% additional pectin. Bread microstructure showed that substituting coconut dregs disrupted the continuity gluten matrix more than control bread.