The Chairman of the Greek Election Commission, Farouk Sultan, announced that Mr Morsi had won 51.7 percent of the runoff vote while former general Ahmed Shafik, garnered 48.3 percent.
The voter urnout was 51 percent.
The announcement has put an end to nerve-wracking uncertainty about who is the official winner as both, Ahmed Shafiq and Morsi had claimed the victory before.
Egyptians had thronged the Tahrir Square, waiting for the election results. The jubilation was in the air when Morsi's name was announced on TV as the clear winner of the runoff.
The chants of "Morsi, Morsi" was echoing out from the cheering crowd.
Earlier, there were fears violence could break out after Sunday's announcement, so authorities have deployed extra security forces in Cairo streets and near key state institutions.
Morsi's spokesman Ahmed Abdel-Attie said words cannot describe the "joy" in this "historic moment."
"We got to this moment because of the blood of the martyrs of the revolution," he said. "Egypt will start a new phase in its history."
Morsi’s victory is a symbolic culmination of a chaotic transition spanning more than an year, that was tightly controlled by the military rulers who took power from Mubarak.
But the revolutionary nation has yet miles to go as far as democracy is concerned as the announcement of the Islamist leader’s triumph will not end the power tussle between the military and the Brotherhood.
Morsi is the first freely elected President of the nation that took 60 years to get its first non-military President as Morsi's predecessors Mohamed Naguib, Gamal Abdel-Nasser, Anwar El-Sadat and Hosni Mubarak, who ruled the country since the 1952 Free Officers' Coup, all came from military. Many Egyptians have rallied behind Morsi as a chance to finally rid the country of the old Mubarak regime.
A Morsi victory will likely see the new civilian government fight for its authority against a military that has ensured that its powers persist past the transition.
The military, which took over after Mubarak's ouster, has pledged to hand over power to civilian rule by July 01. But on June 15, the country's highest court dissolved the country's Islamist-led Parliament, calling the law under which it had been elected unconstitutional. Two days later the generals issued a declaration in which they gave themselves legislative powers, including control over drafting a Constitution.
Brotherhood leaders say the military is holding the election results hostage to get the movement to accept the power grab.
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