"I will serve the people in a very humble way. According to the people's wishes, I will save the nation's economy that faces a crisis."
Korea's election commission said Lee had 47.6 per cent of the vote and Chung Dong-young, a liberal, was a distant second at 27.1 per cent, with 73.6 per cent of ballots counted.
The office of Roh Moo-hyun, a president, congratulated Lee on his win.
The results were similar to an exit poll by TV station SBS that had Lee winning with 51.3 per cent of the vote. YTN news channel's exit poll put Lee on top with 49 per cent.
While Lee's victory was never in doubt, the outcome of a fraud inquiry may prevent him from taking office.
Lee Myung-bak, 65
(Grand National party)
Former CEO of Hyundai Group construction arm
Carried out impressive projects when he was mayor of Seoul
Wants to cut red tape for businesses, make country more attractive to foreign investors and clamp down on unions
Pledges to take a tough line on North Korea and link aid to Pyongyang's progress on denuclearisation
Chung Dong-young, 54 (United New Democratic party)
Nearest rival to Lee but still about 30 points behind in opinion polls
Former television newscaster
Served in the current government as minister responsible for North Korea
Wants to increase welfare spending and use government to help make aerospace and robotics industries drivers of economy
Advocates steady aid to North Korea and expanding co-operation projects
South Korean newspapers described the presidential election as a watershed moment in the country's history.
Thirty-seven million voters in the country of 49 million people were eligible to vote in the fifth election since the direct presidential ballot was restored in 1987 after years of military rule.
In the 2002 poll, turnout was 70.8 per cent, the lowest since 1987.
Unlike previous elections dominated by issues such as security policy with rival North Korea or relations with the US, this year voters were focused on economic matters.
This was due to concern over sky-high real-estate prices, soaring unemployment and a widening gap between the rich and poor.
Lee's campaign touted his business credentials, but his business dealings could now come back to haunt him.
Prosecutors had already cleared Lee of wrongdoing in a stock manipulation case but parliament this week approved a new investigation.
The independent counsel is due to complete the probe before the February 25 inauguration, and Lee has promised to step aside from the presidency if found at fault.
Al Jazeera's Melissa Chan, reporting from Seoul, said that while the economy was the biggest issue for voters this time, the repercussions of the ballot would go far beyond domestic issues.
The North Korean issue may have fallen by the wayside in the run-up to election day.
But the new president will set the policy agenda until 2012, affecting how peace and denuclearisation on the Korean peninsula plays out.
That, in turn, will help determine the extent of South Korean influence in the Asia region in the coming years, Chan said.
However, Park Young-Ho, an analyst at the Korea Institute for Reunification, told Al Jazeera that inter-Korean relations will not face any significant setback, despite Lee's plan to take a more conservative approach to North Korea.
He said: "This is because the new president will continue on with the engagement policy the previous president has undertaken.
"I don't think North Korea will reverse its policy towards the South even if a conservative approach is considered."
Lee Sook-Jaong, a professor at Seong Kyeun Gwan University, said Lee would "emphasise more on cross-consultations with the US government and also for support from the international community ... as well as on a principled approach to North Korea".
Lee has said he will take a more critical view over aid to North Korea and says he will bolster ties with the US, which has 28,000 troops deployed in South Korea.
In 2002, Roh Moo-hyun, who is constitutionally barred from seeking re-election, was elected after pledging not to "kowtow" to the US while also continuing the rapprochement with the North fostered by his predecessor Kim Dae-jung.
Despite a second meeting between the North and South Korean leaders in October, Lee is expected to reverse the "sunshine" policy.
Al Jazeera's Chan said a reversal of that policy could change the security situation among the two Koreas, their neighbours, and the US.
The situation might eventually overshadow economic concerns that have occupied South Koreans in this election.