Labour's Angela Sinfield won the Keighley West seat with a majority of 603 after its BNP councillor Angela Clark stood down last month.
Standing for the BNP, Ian Dawson came second, followed by the Conservative and Liberal Democrat candidates in a poll which saw a 35% turnout.
Later, Ms Sinfield described the result as a victory over extremism.
Seats reduced
"This is the second time Keighley has rejected extremism," she said.
"The first time was in the general election. The BNP need to get the message that they are not welcome in Keighley and need to leave."
BNP spokesman Dr Phil Edwards said: "This is by no means a disastrous result and does not mean we are not welcome in Keighley.
"We have secured nearly a third of the votes, which is still a good result."
The BNP won four seats on Bradford Council in 2004 but this has now been reduced to three.
In last year's general election, party leader Nick Griffin chose to stand in Keighley but received only 9% of the vote.
Ms Sinfield secured 1,819 votes and Mr Dawson received 1,216 while Lionel Lockley for the Conservatives polled 627 and Liberal Democrat Victoria Salmons got 208.
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