The ruling party's candidate in the Honduran presidential election on 27 November, Porfirio Lobo, has conceded defeat to Manuel Zelaya Rosales.
Manuel Zelaya is said to have begun picking ministers
He told a rally in Tegucigalpa that he had contacted Mr Zelaya to wish him "the best of luck... for democracy and for the good of Honduras".
Final results of the poll are still awaited but Mr Zelaya leads by about 4% with nearly 90% of votes counted.
The election was largely fought on law and order, and poverty.
Mr Lobo had attacked an early announcement of his rival's victory by Aristides Mejia, the head of the country's electoral tribunal, who declared for him on Monday.
Porfirio Lobo had initially refused to admit defeat
In a BBC interview, he said the official had acted prematurely and he would not admit defeat until every vote had been counted.
On Wednesday, he told supporters that the ruling National Party was "still alive" and would represent a "constructive opposition" to the new government, which will take power from outgoing President Ricardo Maduro on 27 January.
Both candidates, who were neck-and-neck going into the polls, had vowed to cut crime in Honduras, which is wracked by gang violence, 30% unemployment and poverty.
Mr Zelaya, 53, is a civil engineer and rancher who has previously served as investment minister and was standing for the Liberal Party.
He said he wanted to maintain life sentences for the worst offences while doubling police on the streets.
Mr Lobo, 57, is a former communist who pledged to introduce the death penalty for crimes such as sexual assault, kidnapping and murder.
The three other candidates who contested the election failed to draw widespread support.
An estimated four million registered Honduran voters also elected 298 mayors and 128 deputies to the single-chamber Congress.