Democrat presidential hopefuls have moved on to the next battleground after a surprise Iowa win for John Kerry.
Mr Kerry may now retake the front-runner status he lost to Mr Dean
A near-record turnout put John Edwards second and the race for the party nomination is said to be wide open.
Poor results ended Dick Gephardt's hopes while Howard Dean lost momentum ahead of New Hampshire where runners include Wesley Clark and Joe Lieberman.
President George W Bush will reclaim the political spotlight with his State of the Union speech on Tuesday night.
He is expected to stress his commitment to America's security and prosperity in the face of continuing threats from al-Qaeda and an economic recovery not generating many new jobs.
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]
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%.
Mr Gephardt, a veteran politician from neighbouring Missouri won just 10.5% support and withdrew from the race.
Even as the Iowa result was being digested, candidates were already flying to New Hampshire which holds its primary vote next week.
That race is also being very closely watched and will be the first test for Senator Lieberman and former General Clark, who did not enter the Iowa campaign.
"Thank you Iowa for making me the Comeback Kerry," Mr Kerry told jubilant supporters in the Iowa state capital Des Moines, alluding to Bill Clinton's successful primary run in 1992 when he became known as the Comeback Kid.
"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 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 leading up to Iowa - remained upbeat despite his third place.
"We have not begun to fight," he told supporters. "We will not quit now or ever."
Mr 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".
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.
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, about 120,000 Democrats took part in the Iowa caucus gatherings in nearly 2,000 locations across the state.
The turnout was double that of four years ago and near that of 1988 when official attendance was not recorded but estimates said there were 125,000 caucus-goers.
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.