Cardinal Jorge Bergoglio has been elected the 266th Pontiff, taking the name Pope Francis.
The 76-year-old Cardinal from Buenos Aires - the first Pope from Latin America - is known for modernising Argentina's conservative Catholic Church.
The Papal Conclave elected Pope Francis with its fifth ballot, signalled by white smoke seen billowing from the Sistine Chapel chimney shortly after 6pm (UK time).
The surprise choice for some (Ladbrooks had odds of 33-1 for the cardinal) was later unveiled on the balcony of the St Peter's Basilica to cheers from the crowds below.
His opening words to the gathered crowds was "Buona Sera" - good evening in Italian.
He went on: "I would like to thank you for your welcome, the community of Rome, it's brotherhood, I thank you.
"Above all, I would like to pray for Pope Benedict XVI."
Minutes after his opening speech, a message was sent from the official papal Twitter account, which had been re-activated:
Cardinal Bergoglio came second in the conclave which chose Pope Benedict, who retired last month.
He is the first pope to be chosen from outside Europe for more than a millennium.
Following the appointment world leaders sent their congratulations to the new Pope.
US President Barack Obama said in a statement: "On behalf of the American people, Michelle and I offer our warm wishes to His Holiness Pope Francis as he ascends to the Chair of Saint Peter and begins his papacy.
"As a champion of the poor and the most vulnerable among us, he carries forth the message of love and compassion that has inspired the world for more than two thousand years - that in each other we see the face of God."
Pope Francis' schedule for the next few days (all times are local: GMT+1) includes:
Thursday 11am - Mass in the Sistine Chapel with the other cardinals
Friday 11am - Audience with cardinals
Saturday 11am - Audience with journalists
Sunday - Pope to recite Angelus
Tuesday 9:30am - Installation Mass in Sistine Chapel
(Catholic News Service)
ITV News' Social Affairs Editor Penny Marshall reports on the UK's reaction to the pope's historic election.