The Democrats' leader in the Senate, Tom Daschle has lost his South Dakota seat to Republican John Thune.
Democrat leader Daschle was the top Republican target
Mr Daschle is the first Senate leader in more than half a century to be voted out of office and was the Republicans' top congressional target.
President George W Bush's party has tightened its grip on both houses and is set to boost its majorities.
The Senate Republican majority leader predicted four gains for his party in the upper house and three in the lower.
"It really is monumental. Nobody expected that. It is huge," said Bill Frist.
Mr Daschle lost to Mr Thune by some 4,500 votes. He became a senator in 1986 after eight years in the House of Representatives.
Republicans now control at least 53 of the 100 Senate seats, with two still undecided, but heading their way.
One of the few bright spots for the Democrats was in Illinois, where Democratic rising star Barack Obama won by a comfortable margin.
He will be the Senate's only black member after defeating a black Republican, Alan Keyes.
Republicans are celebrating victories in a number of southern states, including Georgia, where Johnny Isakson took the seat of retiring maverick Democrat Zell Miller.
KEY REPUBLICAN VICTORIES
Johnny Isakson takes Georgia seat of retiring Zell Miller
Richard Burr takes North Carolina seat where John Edwards stood down
Jim DeMint wins open South Carolina seat as Fritz Hollings retires
Incumbents Arlen Specter and Jim Bunning fight off strong challenges
The Democrats have also lost the seat of vice-presidential candidate John Edwards in North Carolina.
Republican Richard Burr beat former Clinton aide Erskine Bowles for the seat, which Mr Edwards did not contest.
Republican incumbents survived a couple of strong challenges - Jim Bunning saw off unexpectedly strong competition in Kentucky and Arlen Specter won narrowly in Pennsylvania.
Republican Lisa Murkowski of Alaska looked set to retain her seat
against Democrat Tony Knowles, with thousands of
absentee ballots - which traditionally trend Republican - still
to be counted.
The Republicans also successfully defended an open seat in conservative Oklahoma, where Tom Coburn defeated Democrat Brad Carson.
But they lost an open seat in Colorado, where Democrat Ken Salazar beat Republican Pete Coors.
Mr Salazar replaces the retiring Ben Nighthorse Campbell, the only Native American senator.
In Florida, Democrat Betty Castor conceded to
Republican Mel Martinez, a Cuban immigrant, in the race for the open seat of retiring Bob Graham, but as many as 200,000 absentee and provisional ballots are still to be counted.
In Louisiana, Republican David Vitter won a first-round victory in the state's multi-candidate race.
Leading senators including John McCain, Charles Schumer and Russ Feingold held onto their seats.
A third of the Senate's 100 seats were up for grabs, with many incumbents re-elected.
The House of Representatives is to remain in Republican hands - with a slightly increased majority. They have held the lower house since 1994.
All 435 House seats were up for election.
Salazar is poised to become one of few winning Democrats
With three races yet to be decided, the Republicans held 231 seats to the Democrats' 200. There is one Democratic-aligned independent.
Nick Clooney, father of the actor George Clooney, lost his bid to win an open seat for the Democrats in Kentucky.
Republicans gained four House seats in Texas, the scene of a messy battle over redistricting last year.
They picked off senior House Democrats including Martin Frost and Charlie Stenholm among others.
One of the Democrats' few consolations was the defeat of Phil Crane, the longest-serving Republican member of the House, by Melissa Bean.
A final tally is not expected for several days.
Voters also chose governors in 11 states.
The Republicans captured Indiana and Missouri from the Democrats, while the Democrats took New Hampshire and Montana away from sitting Republicans.
One race, in Washington state, remains too close to call.
There are also about 5,800 seats - 80% of the national total - up for grabs in legislatures in 44 states.