Senator John Kerry has won the first of a series of votes to choose a Democratic challenger to President George W Bush in November's US election.
John Kerry's victory has thrown the race wide open
Vietnam veteran Mr Kerry, 60, beat Senator John Edwards into second place in the Iowa vote, with early favourite Howard Dean well behind in third place.
Congressman Dick Gephardt came fourth and has dropped out of the campaign.
Tens of thousands of Iowan Democrats voted at meetings - known as caucuses - in public halls, schools and homes.
Massachusetts Senator Mr Kerry took 38% of the vote, with North Carolina Senator Mr Edwards on 32% and former Vermont Governor Mr Dean on 18%.
IOWA RESULTS (Provisional)
1. John Kerry 37.7%
2. John Edwards 31.8%
3. Howard Dean 18%
4. Richard Gephardt 10.5%
5. Dennis Kucinich 1.3%
6. Al Sharpton 0.7%
[Joe Lieberman and Wesley Clark not competing in Iowa]
"Thank you Iowa for making me the Comeback Kerry," Mr Kerry told jubilant supporters in the Iowan state capital Des Moines.
"We came from behind, and we came for the fight and now I have a special message for the special interests that have a home in the Bush White House: We're coming, you're going, and don't let the door hit you on the way out."
The BBC's Rob Watson in Des Moines, Iowa's state capital, says Mr Kerry is by no means certain to win the eventual nomination, but a good result attracts money and credibility for the contests in other states.
He adds that it was also a very good result for Mr Edwards, with Iowans clearly warming to his southern charm and positive message.
Two weeks ago, Mr Dean and Mr Gephardt were the co-favourites to win in Iowa, but in recent days analysts in the midwestern state had expected a close race between the four main candidates.
Mr Dean - seen as the front-runner in the Democratic race - remained upbeat despite his third place.
"We have not begun to fight," he told supporters. "We will not quit now or ever."
North Carolina senator John Edwards appeared happy as he met his supporters, saying the people of Iowa had confirmed "they believe in a positive, uplifting vision to change America".
Bowing out of the race after his poor result, Mr Gephardt pledged to support whoever eventually won the party's nomination "in any way I can".
The other candidates in Iowa were Representative Dennis Kucinich who won 1.3% of the vote and civil rights activist Reverend Al Sharpton who won less than 1%.
Iowa is traditionally the first to make its choice for presidential nominee.
Two other strong contenders, Senator Joe Lieberman and retired general Wesley Clarke, will join the contest next week when Democrats in the state of New Hampshire hold their election.
3 February: "Super Seven". Primaries and caucuses in Arizona, Delaware, Missouri, Oklahoma, South Carolina, New Mexico and North Dakota. Virginia Republican caucuses
7 February: Democratic caucuses in Washington and Michigan
8 February: Democratic presidential caucus in Maine
Despite icy conditions, more than 100,000 Democrats turned out for the Iowa caucus gatherings in nearly 2,000 locations across the state.
The caucuses are an unusual process, our correspondent says. First, the meeting discusses the candidates' merits. Then those attending break up into groups, depending on which candidate they support.
Many other states use party elections called primaries, rather than caucuses, to test the candidates' popularity.
Next week's vote in New Hampshire - neighbour to Mr Kerry's home state of Massachusetts - is followed by the primary in South Carolina, where Senator Edwards was born.
Meanwhile, President Bush is preparing to grab the spotlight later on Tuesday when he makes his State of the Union speech to Congress.
He is expected to stress his commitment to America's security and economic prosperity in the face of continuing threats from al-Qaeda and a recovery not generating many new jobs.