The America's Cup Village in Auckland rang with the honking of hundreds of fog horns on Sunday as a flotilla of boats cheered Louis Vuitton Cup winner, Italy's Prada Challenge, which knocked the Americans out of the cup for the first time.

Tens of thousands crammed into the village to greet the victorious crew with green, red and white flags and painted faces, and cries of "Bravo Francesco!"

Prada Challenge defeated rivals AmericaOne to win the right to challenge for the world's oldest sporting trophy, the America's Cup.

Prada Challenge won the final race by just 49 seconds to win the series 5-4. For the first time in 149 years there will be no American boat in the America's Cup. And for only the second time, Italy will be in the race.

The Prada boat, known as Luna Rossa, is the 30th challenger for the America's Cup, winning after 202 races in a series which began on October 18. Eleven syndicates from seven countries took part.

Skipper Francesco de De Angelis gave a broad grin when he realised the Americans were out.

"Times change, that is the joy of life. From one point of view it's sad, but on the other side it means something is changing in the sailing world which I think is good for the sport. The more this sport is spread around the better it is," he said.

Speaking soon after his defeat, AmericaOne skipper Paul Cayard said the divided American effort probably pushed the United States out of the cup they held from 1851 until 1983.

But he was gracious in defeat, saying his long-time friend Francesco de Angelis was a great sailor and he wished him well in the finals.

"But again, Prada is the model and we did a damn good job with what we had and I'm very proud of it."

A complete lack of wind forced a delay of one hour, but by the time Luna Rossa was crossing the finish line there was around 17 knots (31km per hour) of wind.

Metres short of the finish line, the Italians were already celebrating and once the finishing gun went a delighted Patrizio Bertelli, who officially put $50m into the bid, leapt aboard with champagne.

The police and coastguard began broadcasting appeals for the hundreds of boats to slow down in what quickly turned into a race for the inner harbour.