But many voters, disenchanted with the ruling centre-left "Concertacion" coalition that has governed the world's top copper producer since the end of General Augusto Pinochet's 1973-1990 reign, said it was time for a change.
Critics said the government could have made better use in recent years of billions of dollars in copper boom savings and there was also growing frustration over an old guard dominating politics.
Pinera, ranked No. 701 on Forbes' global list of the world's richest individuals, won 44 per cent in the December 13 first-round vote, while Frei took 29.6 per cent.
"Better times are coming for Chile. There is a great new phase on the way," Pinera, who will take power in March, said on Sunday.
"After 20 years I think a change will be good for Chile. It's like opening the windows of your home to let fresh air come in."
Lucia Newman, Al Jazeera's Latin America editor reporting from Santiago, described the vote as an extraordinary political shakeup for Chile.
Most Chileans believe he can deliver on his promise to govern as efficiently and as profitably as he has his own business interests, our correspondent said.
But critics said he would simply help his own business interests and those who have supported him, rather than ordinary Chileans.
The 60-year-old, who made his fortune introducing credit cards to Chile and has a major stake in flagship airline LAN, benefited from divisions in the ruling coalition.
He also sought to distance himself from the bloody legacy of Pinochet's rule, when more than 3,000 people were killed or "disappeared" and about 28,000 people were tortured, and has reached out to the large middle class.
He campaigned promising to give Chile's state-owned enterprises an overhaul to boost efficiency, create a million jobs and grow by an average 6 per cent a year the country's economy which suffered its first recession in a decade in 2009.
Frei, who was president from 1994-2000, had vowed on the campaign trail to continue the popular welfare policies of Michelle Bachelet, the outgoing president.
He, along with Bachelet and the ruling coalition, had reined in Pinera's wide lead earlier in the campaign, by invoking the legacy of Pinochet, whose dictatorship was supported by the parties that make up Pinera's coalition.
In conceding defeat on Sunday, Frei said: "Chile is much better than the country we received in 1990.
"We will be guardians of liberty and of all our social victories."