Thora Arnorsdottir, a 37-year-old respected journalist with no political background who just had a baby, has acknowledged defeat against incumbent Olafur Ragnar Grimsson in Iceland's presidential election.
Grimsson, a 69-year-old socialist who has held the largely ceremonial post since 1996, looks set to win a record fifth straight term in office according to preliminary results.
With 41.6 per cent of votes counted, Grimsson was seen garnering 51.2 per cent of votes, while Arnorsdottir, who interrupted her campaign for a week in May to give birth to her third child, was credited with 34.8 per cent.
"This has been a valuable experience. Now I will take a holiday, attend to my new daughter and the other children and go on maternity leave and think how I can put this experience to use," Arnorsdottir told public broadcaster RUV.
"To get more than one-third [of votes], I'm overwhelmed. I of course hoped to win," she said, adding she had no plans to run again in four years: "This is something you only do once in a lifetime."
Arnorsdottir, a journalist with no political affiliation had called for a change after Grimsson's 16 years in power.
She was seen as a fresh face at a time when many Icelanders clamoured for a new breed of politicians to clean out the ranks following the country's devastating economic crash in 2008.
She decided to run after reading an official report on the crash and found that, especially when it came to "ethics and our political system, ... nothing had really changed".
Some 236,000 people were eligible to vote on Saturday, with opinion polls in the final days of the campaign suggesting that Grimsson was headed for a comfortable victory.
Polling booths closed at 2200GMT, and results began trickling in soon after that.
Grimsson, a socialist, said his political savvy was needed as Iceland, which is recovering rapidly from its crash and already returned to growth, tackles thorny EU membership talks and an October referendum on a new constitution.
"Iceland is now at a crossroads. Behind us are difficult years. Ahead are decisions on the constitution and our relationship with other countries in Europe," the silver-haired president wrote in an article published in daily Morgunbladid on voting day.
"There is still turbulence in the continent's economy and in many areas ... The president ... shall assist the country in tackling the biggest issues; they will determine the fate of Icelanders for decades," he wrote.
Grimsson is, like a majority of Icelanders, opposed to EU membership for fear the North Atlantic nation will lose its sovereignty.
The left-wing government applied, however, to join the bloc in 2009 after the financial and economic crash that saw Iceland's three biggest banks collapse and required a $2.1 billion bailout from the International Monetary Fund.
Arnorsdottir led in the polls initially, after Grimsson announced in January that he would not stand for re-election.
But after a petition gathered more than 30,000 signatures, about a tenth of the population urging him to reconsider, he announced in March he would stand after all, and has since then led in the public opinion.
A former university professor, Grimsson will now begin a record fifth four-year term in office, though he has won only three presidential elections: in both 2000 and 2008 he was the only candidate and was granted a new term without a vote.
Iceland has had five presidents since its independence from Denmark in 1944, three of whom have served four terms.