The distinctive white rocket plane was released from a larger plane called the White Knight and ignited its rocket engine to enter space 100km above the earth.
Against the backdrop of a clear blue sky, it landed safely back at a runway in the Mojave Desert in California, about 160km north of Los Angeles.
"The colours were pretty staggering from up there," said pilot Michael Melvill, who also earned his wings, officially, as an astronaut. "It was almost a religious experience."
Melvill said he could see the black expanse of outer space, the curvature of the earth and a broad swathe of the Southern California coast during his three-and-half minutes just beyond earth's atmosphere.
The unprecedented $20 million project was intended to demonstrate the viability of commercial space flight and open the door for space tourism.
"It was almost a religious experience"
The plane with its striking nose - a pointed cone covered with small portholes - was designed by legendary aerospace designer Burt Rutan and built with more than $20 million in funding by billionaire Paul Allen, who co-founded Microsoft Corp.
After burning its rocket for 80 seconds, SpaceShipOne sped up to more than three times the speed of sound and then coasted to its peak altitude, making Melvill weightless.
Melville said he released a bag of M&Ms chocolates to see if they would float in the cockpit.
"It was amazing, these M&Ms were going around everywhere," he said.
The flight marked the first time that a non-government spacecraft reached the altitude considered to be the boundary between earth's atmosphere and outer space.
Allen and SpaceShipOne's builders were expected to next try for the Ansari X Prize, which is $10 million for the first team that sends three people, or an equivalent weight, on a manned space vehicle 100km above the earth and repeats the trip within two weeks.