In results given late Tuesday by the Supreme Electoral Council, Ortega, 60, won Sunday's election outright, avoiding a difficult runoff vote against conservative rival Eduardo Montealegre, who conceded defeat.
"We feel conditions are right in our country for a new political culture that will lead us with a constructive spirit out of adversity and dispute, putting Nicaragua and its poor first," Ortega said in a victory speech.
"The results favour Daniel Ortega, whom I've called to congratulate," Montealegre, of the National Liberal Alliance, said in a speech conceding defeat.
"He has been elected democratically and will have to govern so," Montealegre added, hinting at Ortega's murky past as president of Nicaragua's leftist Sandinista government from 1979 to 1990.
An Organisation of American States observer mission said the voting was "peaceful, massive and orderly, and was conducted in accordance with the law."
Ortega, of the reformed Sandinista Party, has since traded his Marxist policies for a more liberal political agenda.
He won 38 percent of the vote, with 91 percent of voting precincts counted, the council said. He needed to secure at least 35 percent of the vote and a five-point lead on his closest rival to avoid a runoff.
Montealegre came in second with 29 percent of the vote, followed by Jose Rizo, also a conservative, of the Liberal Constitutionalist Party, with 26 percent.
Pundits believe a runoff between Ortega and Montealegre would have been difficult to predict, since the conservative vote would not have been split.
Dressed in dark slacks and a white shirt, Ortega said his victory was an "opportunity to build a Nicaragua with reconciliation, understanding and talking to each other, reaching for consensus in the midst of our differences."
Speaking after he met with Montealegre, Ortega said his rival's visit "is a clear sign that as Nicaraguans we must work together for the good of the country."
He also reached out to foreign investors, saying Nicaragua "is open" to their money.
Cuban President Fidel Castro, once a staunch supporter of the Sandinista administration, also congratulated Ortega for his "grandiose victory."
In a statement attributed to him read over Cuban television, Castro branded Ortega's triumph a "Sandinista victory that fills our people with happiness and the terrorist and genocidal government of the United States with dishonour."
Venezuelan President Hugo Chavez, who helped Ortega's drive for the presidency by delivering cheap crude oil through Sandinista mayors, telephoned Ortega to congratulate him.
"We're very proud of you," Chavez was heard telling Ortega in the conversation that was broadcast live by the media. He invited Ortega to join Venezuela in "building the future socialist brotherhood of the 21st century."
Throughout Ortega's campaign, Washington had urged Nicaraguans to defeat Ortega, whose Soviet-backed Sandinista government seized private assets, distributed land to poor peasants and battled US-financed Contra rebels throughout the 1980s.
US ambassador to Nicaragua Paul Trivelli branded Ortega "a tiger who has not changed his stripes" and claimed a Sandinista victory would lead to "the introduction of a Chavez model" in Nicaragua.
Ortega lost a 1990 election, and failed in two subsequent attempts to recapture power. For Sunday's election he dramatically toned down his revolutionary rhetoric, picked a former Contra as a running mate, and vowed to strengthen democracy.
Former US president Jimmy Carter, who monitored Sunday's vote, told CNN Tuesday that key Nicaraguan business and finance leaders he met with here were "all willing to give the Sandinistas a chance."
He also said that US Secretary of State Condoleezza Rice had told him that if the Nicaraguan election was deemed "honest and fair" and Ortega "reaches out in a respectful and supportive way, then the United States will reciprocate."
"I think there is no doubt that the future relations between the US and Nicaragua will be improved," Carter said.
The White House said warily late Tuesday that it would work with Ortega.
"The United States is committed to the Nicaraguan people. We will work with their leaders based on their commitment to and actions in support of Nicaragua's democratic future," said national security spokesman Gordon Johndroe.

Copyright AFP (Agence France-Presse), 2006