Gay and lesbian groups nationwide raised money for Ms Parker (centre)
Houston has become the largest US city to elect an openly gay mayor.
Annise Parker, the current city controller, won 53.6% in the run-off election, beating fellow Democrat Gene Locke, a former city attorney.
"The voters of Houston have opened the door to history," Ms Parker told supporters following her victory.
Campaigning ahead of the hotly contested vote in the Texan city, which has a population of 2.2 million people, was marked by anti-gay rhetoric.
Anti-gay activists and conservative religious groups endorsed Mr Locke and sent out leaflets to residents condemning Ms Parker's "homosexual behaviour".
Meanwhile, gay and lesbian political organisations nationwide countered by raising money for Ms Parker and urging people to vote.
Mr Locke condemned the anti-gay attacks, but two of his key supporters contributed money to a political action committee that urged votes not to pick Ms Parker because she was endorsed by the "gay and lesbian caucus".
"This election has changed the world for the gay, lesbian, bisexual and transgendered community. Just as it is about transforming the lives of all Houstonians for the better, and that's what my administration will be about," Ms Parker declared after Saturday's run-off.
Ms Parker will face a $130m budget deficit when her term as mayor begins in early January.
Houston is the fourth largest US city. Several smaller cities already have openly gay mayors, including Portland, Oregon and Providence, Rhode Island.