Eighteen minutes after the rocket carrying the satellite blasted off into a cloudy sky from its launch pad in southern India, the satellite named Resourcesat-1 was injected into orbit.
Madhavan Nair, chairman of the Indian Space Research Organisation (ISRO) described it as a "textbook" launch.
"It was a tremendous achievement," Nair said, adding that the launch vehicle, the locally-built Polar Satellite Launch Vehicle, had proved "fail-safe" as it had already sent six other satellites into orbit.
"It was a perfect textbook launch, with all the separations taking place at predetermined intervals," Nair added.
Resourcesat-1 is India's most advanced remote sensing satellite till date and would provide continuity to the services of other remote sensing satellites that have far outlived their mission lives.
The launch comes two days after China sent its first man-mission into space.
India and China have a space rivalry and Indian Prime Minister Atal Behari Vajpayee has announced that the country was preparing to send a mission to the moon by 2008.