Argentinian Cardinal Jorge Mario Bergoglio has been elected as the new Pope.
The 76-year-old, who will be known as Pope Francis, appeared on the balcony of St Peter's Basilica to cheers from tens of thousands of the faithful gathered below.
Addressing the crowds, the first non-European pontiff for more than a millennium said: "As you know, the duty of the conclave was to appoint a bishop of Rome. It seems to me that my brother cardinals have chosen one who is from far away, but here I am.
"I would like to thank you for your embrace, also to ... the bishops, thank you very much. The world should set off on a path of love and fraternity."
He also conducted a prayer for 'pope emeritus' - former pontiff Benedict XVI - who he is thought to have been runner-up to at the last conclave in 2005.
But his address featured a break with tradition, when he asked those present to prayer for him before he blessed the crowd.
Pope Francis - also the first Jesuit to hold the post - went on to deliver a blessing to "all men and women of good will", before calling for "brotherhood" in the Church.
White smoke rising from the conclave at the Vatican signalled a decision had been reached on the new head of the world's 1.2 billion Catholics.
His appearance came after French Cardinal Jean-Louis Tauran, , the protodeacon, announced "Habemus Papam" - "We have a pope" - and gave the name of the new pontiff in Latin.
A roar emanated from the huge crowds gathered outside the Vatican in St Peter's Square as the white smoke indicated the new pontiff had obtained the required two-thirds majority in the fifth round of voting by 115 cardinals over two days.
The quick election was a surprise given there was no clear front-runner going into the vote - and the upheaval in the church prompted by Pope Benedict XVI's resignation last month.
His departure threw the church into turmoil and exposed deep divisions among cardinals tasked with finding a manager to clean up a Vatican bureaucracy embroiled in recent scandals.
The Pope's Twitter account, whose profile was changed to read 'Sede Vacante' when Benedict stepped down, has now been switched back to 'Pontifex'.
Minutes after his address, a message was sent from the account, saying: "HABEMUS PAPAM FRANCISCUM" - which roughly translates as "We have Pope Francis."
Prime Minister David Cameron tweeted that it was "a momentous day for the 1.2bn Catholics around the world" while UN secretary-general Ban Ki-moon gave his "heartfelt congratulations".
Meanwhile, US President Barack Obama issued a statement offering his "warm wishes" to the new Pope.