The liberal 62-year old Democratic whip from San Francisco defeated Harold Ford Jr of Tennessee - who would have become the party's first black leader had he won.
She becomes the first female to head either party in Congress and replaces Richard Gephardt of Missouri.
He stepped down after the elections, which saw the Republicans increase their majority in the House of Representatives and recapture the Senate.
Nancy Pelosi has been an outspoken critic of Republican President George W Bush's policy on Iraq, and has faced suggestions that she may be too liberal to lead the party.
Another opponent, also a woman, Marcy Kaptur of Ohio, dropped out of the race shortly before Thursday's vote.
The BBC's Justin Webb in Washington said the move looks like a risky strategy for the party, as Ms Pelosi supports causes that are unfashionable outside liberal California, such as gay marriage.
But, our correspondent says, the Democrats hope a sharper differentiation of their policies from the Republicans might reinvigorate the party faithful and persuade other Americans that the party has something to say.
"I'm very, very honoured," Ms Pelosi said shortly after the vote, which was 177-29, according to unofficial results.
'Aggressive leadership'
The other three top jobs for the Congress taking power in early 2003 were distributed on Wednesday:
Mr Lott promised aggressive leadership to achieve Republican priorities on national security and the economy, but also pledged to work with Democrats.
He said: "We have a lot of work to do and we are thankful for the opportunity to work with our president... with the House of Representatives and the Senate for results on behalf of the American people."
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