With over 90% of ballots counted, Lugo had garnered 41% of the vote late on Sunday, with his closest rival and Colorado Party leader Blanca Ovelar de Duarte, 50, receiving 31%. Lino Oviedo, a former military chief and a National Union of Ethical Citizens candidate was trailing in third with 21% of the vote.
"Today we've written a new chapter in our nation's political history," said Lugo, the first non-Colorado Party president since 1946.
Voter turnout was high at around 65% of the 2.8 million registered voters in the country. Although Lugo failed to win a majority vote, there will be no runoff as he is automatically elected president based on a simple majority vote.
Lugo's election campaign focused on the pledge to tackle poverty and unemployment and bring "change" to the country. With a third of the population living below the poverty line, the new president, who resigned from the church in 2006, faces new challenges in the fight against ingrained corruption, inequality and organized crime.
He also pledged to renegotiate payment terms with neighboring Brazil for electricity provided by the joint-owned Itaipu dam, the world's biggest hydroelectric plant.
