Mr Sarkozy said he would be president of all the French
Sarkozy speech
With three quarters of votes counted, Mr Sarkozy has 53%, compared with 47% for socialist Segolene Royal, while turnout is put at 85%.
Mr Sarkozy, 52, the son of a Hungarian immigrant, takes over from the 74-year-old Jacques Chirac.
Riot police are reported to have fired tear gas at demonstrators protesting in central Paris at Mr Sarkozy's victory.
According to the French news agency AFP, a few hundred stone-throwing rioters charged the police in the Place de la Bastille, where 5,000 supporters of Segolene Royal had earlier gathered to hear the results.
Friendship for US
Mr Sarkozy's supporters have gathered for an open-air concert in the Place de la Concorde, which is expected to continue until the early hours.
France has given me everything, and now it is my turn to render to France what France has given me
Nicolas Sarkozy
In his victory speech, Mr Sarkozy said he would be the president of all the French.
"France has given me everything, and now it is my turn to render to France what France has given me," he said.
He said the US could count on France's friendship, but urged Washington to take a lead in the fight against climate change.
He also said he believed deeply in European integration, but appealed to France's partners to understand the importance of social protection.
EARLY RESULTS (73% OF VOTES COUNTED) Nicolas Sarkozy: 53.3% Segolene Royal: 46.7% Turnout: 84.8% Spoiled ballots: 3.75% Source: French Interior Ministry
After he finished speaking at his party headquarters, jubilant supporters sang a rousing rendition of the French national anthem.
Third defeat
Ms Royal is the first woman ever to have made it to the second round of a French presidential election.
Ms Royal was gracious in defeat
Conceding defeat - the third in a row for France's Socialist Party - she thanked 17m French people for their votes, saying she could measure their sadness and their pain.
"I gave it all my efforts, and will continue," she told supporters. "Something has risen up that will not stop."
She expressed the hope that "the next president of the Republic" would accomplish his mission at the service of all the French people.
Mr Sarkozy has promised to try to reform France to face the challenges of the 21st century, with putting the nation back to work at the top of his agenda.
He has pledged to bring unemployment down from 8.3% to below 5% by 2012.
Police deployed
He is also expected to bring forward policies to cut taxes and keep trains running during strikes, in the first 100 days after he takes office on 17 May.
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More than 3,000 police have been deployed in Paris and its multi-ethnic suburbs in case Mr Sarkozy's victory sparks a repeat of the riots seen in 2005.
French pundits greeted the strong turnout as a victory for French democracy.
Both candidates worked hard to woo the supporters of the third-placed candidate in round one, centrist Francois Bayrou.
Polls suggest that they each won over 40% of the Bayrou voters, and that 20% did not cast a ballot in round two.
Nicolas Sarkozy has been elected as the 23rd President of the French Republic with 53% of the vote. His rival, Ségolène Royal, was defeated with 47% of the vote. Ms. Royal has accepted her defeat.

Mr. Sarkozy has promised to be the "President of the French People" and Royal has vowed to "keep on fighting". Sarkozy's first term will begin on 16 May. Sarkozy has promised to try to reform France to face the challenges of the 21st century, with putting the nation back to work at the top of his agenda.

Sarkozy has said that he would also work to form a link between Europe and Africa. "We have to overcome hatred to give way to the great dreams of peace and civilization," he stated in his first speech as President-Elect. "It's time to build a great Mediterranean union." he added. 

U.S. president, George W. Bush has congratulated Mr. Sarkozy.



Image:Nicolas Sarkozy - Meeting in Toulouse for the 2007 French presidential election 0389 2007-04-12 cropped.JPG| '''Nicolas Sarkozy'''  Union for a Popular Movement  53% 
Image:Meeting Royal 2007 02 06 n12.jpg| '''Ségolène Royal''' Socialist Party 47%