And Perry vowed to win the Latino vote in November against Sanchez, a millionaire banker who is the state's first Hispanic nominated by a major party for governor.
With 98 percent of precincts reporting, Sanchez had 603,573 votes, or 60 percent, compared with 331,425 votes, or 33 percent, for former Attorney General Dan Morales.
Sanchez told jubilant supporters that it was time for a leader who didn't rest on the "laurels" of former Gov. George W. Bush. Perry was lieutenant governor under Bush before he was elected president.
"Texas is a can-do state that will no longer tolerate a do-nothing governor," he said.
The race will be one of the nation's most intriguing this fall as Democrats and Republicans battle for 36 governorships that are up for grabs.
Hispanics are the fastest-growing segment of the population, and the GOP hopes to garner their support across the country. President Bush did it when he was Texas governor, and Perry, who has been taking Spanish lessons and making visits to Mexico, hopes to do the same.
"I think it's important for us to respect the culture, and I'm going to get the Hispanic vote," Perry said Tuesday after running unopposed in the primary.
The gubernatorial primary overshadowed a tightly contested primary between Democrats hoping to fill the seat of retiring Republican Sen. Phil Gramm.
Teacher Victor Morales, looking to become the state's first Hispanic senator, and former Dallas Mayor Ron Kirk will face each other in a runoff April 9 since none of the three leading candidates won a majority of the vote Tuesday.
Morales held a slim lead for most of the evening, but with 98 percent of the vote counted, Kirk had pulled ahead. Both men had 33 percent of the vote, with Kirk leading with 317,984 votes to 314,104 votes for Morales. Rep. Ken Bentsen trailed with 27 percent, or 254,019 votes.
The winner of the April runoff will face Attorney General John Cornyn, who won Tuesday's GOP primary with 77 percent of the vote over little known opponents.
The race between Perry and Sanchez may also be noteworthy because of its cost.
In trouncing Morales, Sanchez showed he's willing to spend millions of dollars of his own to win. Sanchez spent about $20 million on the Democratic primary — more than $14 million of it in January and February alone. He invested heavily in television ads that saturated the state.
Now Perry is in his path. Republican supporters have promised for months that the governor won't be outspent.
"I think we'll be looking at a long, expensive and dramatic governor's race in which spending will go over $75 million," said Cal Jillson, professor of political science at Southern Methodist University in Dallas.
A first-time candidate, Sanchez previously had flexed his political muscle by financially backing other candidates, including Mr. Bush. Sanchez gave some $300,000 to Mr. Bush's gubernatorial and presidential campaigns, prompting Morales to question Sanchez's credentials as a Democrat.
In its final days, the race between Morales and Sanchez came down to a fight over their Hispanic heritage.
The men held what was believed to be the first debate in Spanish for a U.S. gubernatorial race, although Morales translated his answers into English, which he called the state's "principal language."
Morales suggested that Sanchez — by insisting that Spanish and English be treated equally — was trying to divide voters by race, ethnicity and language.
Sanchez accused Morales of being "embarrassed" to be Hispanic and chided his opposition to affirmative action in state universities.
Morales waited until late Tuesday to concede the race at a campaign party in his hometown of San Antonio, one of the biggest Democratic battlefields. It was his 11th political race, and his first loss.
"This campaign was by far the toughest, the toughest one that I have faced, and Mr. Sanchez has been by far the toughest opponent that I have faced," Morales said.
Now it's shaping up to be a tough contest in the fall between Sanchez and Perry.
"My friends, let me make something very clear: I will not and I am not going to be a part-time governor. This governor will not be in debt to shadowy special interests," Sanchez said.
Perry, a seasoned campaigner who has risen from legislator up through the ranks of state government, said he'll run on his successes in office. He said he wasn't worried about battling an opponent with so much money to spend.
"There are some things that money can't buy — 17 years of experience that I bring to the table as a legislator, the agriculture commissioner, the lieutenant governor, and now the governor of the state of Texas," Perry said.
By Kelly Shannon