Tabare Vazquez has been confirmed as Uruguay's first left-wing leader after winning more than 50% of the vote in the presidential election.
A triumphant Mr Vazquez appeared in front of thousands of celebrating supporters in a plaza in Montevideo.
Jorge Larranaga of the National Party was Mr Vasquez' closest rival with 34%.
Venezuela's left-wing President Hugo Chavez welcomed the Uruguayan result as a step towards the shaping of a new South America.
Firework celebrations
Election officials confirmed on Monday that 64-year-old Mr Vazquez had won 50.69% of the votes cast and so will avoid a run-off.
It was the third time the cancer specialist and former mayor of Montevideo had stood for the presidency but the first time he had won.
"
After so many years of anger, it's just pure happiness
"
Luis Sancristobal
Flag seller
It was also the first victory for his Frente Amplio (Broad Front) coalition party, bringing 170 years of two-party rule in Uruguay to an end.
Guillermo Stirling from the ruling Colorado Party was beaten into third place with only 10% of the vote.
The BBC's Elliott Gotkine in Montevideo describes fireworks lighting up the night sky as the first exit polls came through.
"Celebrate, Uruguayans!" Mr Vazquez told thousands of people gathered in front of his party's headquarters.
"This victory is yours," he said, before thanking them for their support.
Afterwards, at a news conference, a clearly emotional Mr Vazquez said it had been a "magical night", and that he would not let Uruguay down.
"After so many years of anger, it's just pure happiness," Luis Sancristobal, 29, told Reuters news agency as he sold flags to people celebrating in Montevideo.
All three candidates had tried to convince voters that they were best placed to manage the country's economy following its worst-ever crisis in 2001 and 2002.
Voting is compulsory in Uruguay, and 2.5 million people out of a population of 3.4 million were eligible to vote. They also chose 31 senators and 99 deputies.
Left-wing South America?
Mr Vazquez joins Nestor Kirchner of Argentina, Luiz Inacio Lula da Silva of Brazil, Ricardo Lagos of Chile and Mr Chavez on the list of left-wing and centre-left South American leaders.
Venezuela's president welcomed victory for Mr Vazquez as "a milestone" in Latin American history.
"
What has happened in Uruguay is one more step on the road to building a new South America
"
Hugo Chavez
President of Venezuela
"What has happened in Uruguay is one more step on the road to building a new South America, a new Latin America, a new world that is being born," Mr Chavez said.
Although the Uruguayan economy is now recovering strongly, one in three Uruguayans lives below the poverty line and unemployment is almost 15%.
This sense of stagnation attracts voters to candidates who are critical of the conservative economic policies of the International Monetary Fund and the US, and who promise they will focus on social problems, says BBC Americas analyst Simon Watts.
In practical terms, the leftward shift is more of a change of emphasis than a radical break, he says.
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