Wa Mutharika's party, the Democratic Progressive party, also won a parliamentary majority with 91 out of 193 parliamentary seats.
The opposition MCP took 25 seats while the United Democratic Front (UDF), which joined the MCP in an opposition alliance, won 17. Independent candidates took 26.
Pundits say the win by the DPP is likely to ease a standoff with the opposition that has almost paralysed government and unnerved donors and investors.
Malawi's economy is the world's second-fastest growing economy, according to the the Economist Intelligence Unit.
After early results showed wa Mutharika taking a commanding lead, Tembo said he would go to court to contest the results.
"I have received complaints from all over the country and believe that we have evidence to show that the election was rigged," he told a news conference.
Wa Mutharika based his campaign on a record of making Malawi a net food exporter and delivering three years of growth above seven per cent in the country of 13 million, where annual income per head is only $313.
A Commonwealth election monitoring mission said wa Mutharika, due to be sworn in for a second term on Friday, had exploited state media to gain an unfair advantage.
But the monitors urged the opposition to drop its protest.
Bakili Muluzi, a former president and UDF leader who was excluded from standing but was in an alliance with Tembo, earlier acknowledged wa Mutharika had won.
He said he would support the new government.
Muluzi has been a strong opponent of wa Mutharika and a protracted power struggle between the two almost paralysed parliament, leading to an unsuccessful impeachment bid in 2005 and allegations of a coup plot that worried Western donors.