Kathleen Blanco has won a hotly contested election to become Louisiana's first ever woman governor.
Mr Jindal was trying to become US's first governor of Indian origin
The Democrat of Cajun origin beat Bobby Jindal, a Republican of Punjabi origin, who was trying to become the first US governor of Indian descent.
With 93% of ballots counted, Ms Blanco had 52% of the vote.
Louisiana, a traditionally conservative state, has never had a non-white or female governor. Only 12 years ago a white supremacist was a front-runner.
In polls ahead of the election, Mr Jindal - the son of immigrants from India - enjoyed a consistent, albeit slight, lead.
The two rivals already had a pretend arm wrestling match after TV debates
But Ms Blanco, 60, worked hard to peel voters away from her rival by focusing on health care and accusing Mr Jindal of making huge budget cuts when he was Louisiana's health care chief.
However, some experts say the election campaign left voters somewhat confused as both Mr Jindal and Ms Blanco often offered similar stances on major issues.
"Basically, they agree on everything, and it's just, 'I did it better than you did it," Louisiana's Secretary of State Fox McKeithen was quoted as saying by the Associated Press news agency.