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."
Bachelet will be only the third woman directly elected president of a Latin American country, following Violeta Chamorro, who governed Nicaragua from 1990 to 1997, and Mireya Moscoso, president of Panama from 1999 to 2004.
However, Bachelet, unlike those two women, did not follow a politically prominent husband into power.
Bachelet's father was an air force general who was arrested and tortured for opposing the 1973 coup that brought Pinochet to power. Alberto Bachelet died in prison of a heart attack, probably caused by the torture, Bachelet says.
A 22-year-old medical student at the time, Bachelet was also arrested along with her mother and later forced into five years of exile, first in Australia, then in communist East Germany. She married a fellow Chilean exile while in East Germany. Back in Chile, they separated, and she had a third child from a new relationship.
Lagos, the mentor she is following into power, has deftly balanced his socialist ideology with market-oriented economics and enjoys an approval rate above 70 percent. Lagos is constitutionally prohibited from seeking immediate re-election, but as he voted, his backers chanted "2010," referring to the next election.
In a speech to the nation after congratulating Bachelet on the phone, Lagos said, "We now have a new Chile, we have for the first time in our history a woman president."
In spite of their different political backgrounds and ideologies, both Bachelet and Pinera outlined similar goals, promising to continue the two-decade-long free-market policies that have made Chile's economy one of the healthiest in the region.
Both said they would fight to lower the 8 percent unemployment rate, improve public health, housing and education services and curb rising urban crime. They also promised to reform Chile's 25-year-old private social security systems to ensure better pensions for retirees, though neither has given details of how.
"By the end of my government in 2010 we will have consolidated a system of social protection that will give Chileans and their families the tranquility that they will have a decent job," Bachelet said Sunday.
Lagos and Bachelet belong to the same Socialist Party as Salvador Allende, whose leftist policies prompted Pinochet's bloody coup. But the party allied with other major left-center parties in 1990 to oust the right wing, and their coalition has held while leading Chile into a free-trade pact with the United States, cutting inflation and fostering growth of about 6 percent a year.
Chile's next president will be inaugurated on March 11, joining the ranks of Latin American leaders including leftists such as Venezuela's Hugo Chavez and newly elected Evo Morales of Bolivia.
Bachelet indicated she would work with all the region's leaders. "We shouldn't take Latin America back to the Cold War. Chavez, Morales, they are presidents elected by their peoples. Chile must have relationships with all of them."
Pinochet was not a factor in the campaign, and his spokesman, retired Gen. Guillermo Garin, said he paid little attention to it. At 90, Pinochet is ailing and was only recently freed from house arrest. He faces charges of human rights abuses and corruption stemming from his 17-year rule.