The victory of Michelle Bachelet — a political prisoner during the dictatorship of Gen. Augusto Pinochet and defense minister in the current administration — extends the rule of the market-friendly, center-left coalition that has governed since the end of Pinochet's 1973-90 rule.
"Who would have said, 10, 15 years ago — that a woman would be elected preident!" Bachelet told thousands of supporters.
The 54-year-old made clear she intends to maintain the free-market polices that have turned Chile's economy into one of the strongest in the region.
"We will continue to walk the same road," she said
With more than 97 percent of some 7.2 million votes counted, Bachelet had 53 percent of the vote to just over 46 percent for Sebastian Pinera, who congratulated his opponent on her victory but vowed "to continue to fight for our principles, which do not die today."
Sunday's runoff was necessary after a Dec. 11 election involving four candidates failed to produce a winner with a majority.
Her political success has baffled many Chileans who thought a left-leaning single mother jailed during Pinochet's dictatorship stood little chance in this socially conservative country.
Current President Ricardo Lagos made her his health minister, then in 2002 named her defense minister. She won praise for helping heal divisions between civilians and military left over from the dictatorship.
Bachelet had expected resistance from Chile's conservative military establishment when appointed defense minister. "I was a woman, separated, a socialist, an agnostic ... all possible sins together," said Bachelet, who nonetheless became a popular figure among the admirals and generals.
Bachelet's gender still prompts questions she does not like.
"You wouldn't be asking that question if I was a man," she once chided a Chilean reporter who asked if she would marry again.
But she did answer: "The truth is that I haven't had the time to even think about that. My next four years will be dedicated to work."