Sitiveni Rabuka is Fiji's new prime minister garnering 28 votes to Frank Bainimarama's 27.
The secret ballot vote in parliament ends Frank Bainimarama's reign as leader of the country after 16 years.
Today's result was met with jubilant celebrations in the capital Suva with similar scenes playing out across the country on social media.
Rabuka was sworn in this afternoon.
Rabuka has said he favours Western-style democracy.
His party's manifesto wants to establish dialogue with major powers and reassess borrowing practices to make sure the country does not end up in a debt trap.
Fiji will have three deputy prime ministers in Biman Prasad (finance), Viliame Gavoka (tourism), and Manoa Kamikamica (external trade) under the coalition arrangement.
Siromi Turaga is new Fiji Attorney-General, Lynda Tabuya is women's minister and Pio Tikoduadua in charge of home affairs. Aseri Radrodro gets education portfolio, Ratu Antonio gets health, Ifireimi Vasu responsible for indigenous affairs.
Renowned Suva lawyer Filimoni Vosarogo is lands and mineral resources minister.
New Zealand Prime Minister Jacinda Ardern congratulated Rabuka in a statement.
"I congratulate the new Prime Minister of Fiji, Sitiveni Rabuka, on his election. New Zealand looks forward to working with the new government to further strengthen our very warm relationship.
"We strongly value Fiji as a close friend and partner as we progress our shared priorities for the region.
"I wish to acknowledge former Prime Minister Frank Bainimarama's important legacy for Fiji and his role as a regional leader supporting action on regional issues, including climate change."
Rabuka now heads a three-party coalition government consisting of his People's Alliance, the National Federation Party led by Biman Prasad and the king-making Sodelpa Party, led by Viliame Gavoka.
Gavoka had this to say to reporters following the vote:
"Democracy has won. We live in a wonderful country."
The National Federation Party's Biman Prasad said his party is happy to work with everyone and even the opposition.
Bainimarama, the prime minister for 16 years, told media his removal from power reflected the democratic process.
He has been elected leader of the opposition.
"I want to thank the supporters of FijiFirst," he said. "We still are the biggest political party in there, so I want to thank them for that."
"This is democracy, and this is my legacy, the 2013 Constitution," he said.