Former Green party chief Alexander Van der Bellen has been elected Austrian president, Interior Minister Wolfgang Sobotka said on Monday, narrowly defeating his far-right rival by 0.6 percentage points after all votes were counted.
Van der Bellen, a 72-year-old former professor of economics, received 50.3 per cent of the votes. His rival, far-right Freedom Party candidate Norbert Hofer, received 49.7 per cent.
"Of course I am very sad today," Hofer wrote in a Facebook post, conceding defeat shortly before the official announcement. "I would have liked to have kept watch over this wonderful country as president."
Absentee ballots decided the election, after Sunday's vote resulted in a dead heat between the two candidates.
Hofer, a 45-year-old senior Freedom Party lawmaker, had entered the race as the favourite after having won the first round of elections in April.
Despite Van der Bellen's victory, the strong support for Hofer's eurosceptic and anti-immigration platform signals growing public acceptance of such positions in Europe.
After the final result was announced, Van der Bellen told the media he wants to foster a culture of dialogue, after his narrow win showed many people "do not feel adequately seen or heard."
He said he has set his sights on winning over voters who had supported his rival, adding that "one half [of the electorate] is just as important as the other."
Van der Bellen will succeed current president Heinz Fischer beginning July 8.
ING bank analyst Carsten Brzeski said Monday's final result has done little to calm fears over the recent surge in support for right-wing anti-establishment parties in Europe.
"Almost half of the Austrian voters in fact did vote for right-wing populist Hofer and seem to sympathize with a very strict stance on Austria's refugee policy and a very distant relationship with the EU," Brzeski said.
Meanwhile, other European parties from the far-right appeared invigorated by Hofer's near-success.
France's far-right National Front extended its congratulations to Hofer for his "remarkable campaign and very good result."
Florian Philippot, the right-wing nationalist party's vice president, told broadcaster BFM-TV he is disappointed by Hofer's narrow defeat but pointed to gains made by Austrian conservatives in recent years as indicating a groundswell of support for "sovereignty" parties.
Joerg Meuthen, co-chair of the anti-immigrant Alternative for Germany (AfD) party, said Hofer showed courage and "a clear position above all in the asylum crisis."
"The high support for Hofer makes it clear that more and more people are choosing common sense over utopia and are no longer being fooled by generalities and a supposed lack of alternatives," the AfD leader added.
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