Republican Scott Brown has won a shock victory in the race for the US Senate seat in Massachusetts left vacant by Democrat Edward Kennedy's death.The result is a huge blow to President Barack Obama, whose healthcare reform programme is now in doubt.
Democrat Martha Coakley conceded she had lost the race after early results gave Mr Brown a healthy lead.
The Republican win has robbed the Democrats of their filibuster-proof 60-seat majority in the Senate.
This will make it much harder for Mr Obama to pass a healthcare reform bill - the most important domestic policy objective of his first year as president.
The BBC's Paul Adams, in Boston, says Ms Coakley's defeat is a humiliating blow for the Democrats and their agenda, and a deeply unwelcome anniversary present for President Obama a year after his inauguration.
He adds that it is one of the biggest political upsets in years, and a devastating blow for the Democrats in a seat held for almost half a century by Edward Kennedy, a colossus of the party.
'Senator Beefcake'
In his victory speech, Mr Brown, 50, said that the voters of Massachusetts had "delivered a great victory".
He said: "Tonight, the independent voice of Massachusetts has spoken. The voters of this commonwealth defied the odds and the experts."
He also made it clear he would join his Republican colleagues in trying to block President Obama's healthcare reform proposals.
Dubbed Senator Beefcake in the US media, Mr Brown is a lawyer and former model who posed almost naked for Cosmopolitan magazine in the 1980s while in law school.
After conceding the election in a telephone call to Mr Brown, Ms Coakley told her supporters she was "heartbroken at the result".
Mr Obama had campaigned personally on behalf of Ms Coakley.
Analysts say the race should have been an easy win for her in a state which traditionally has voted for Democratic candidates for the US Senate.
Just weeks ago, Ms Coakley, the state attorney general, had a double-digit lead in polls and seemed destined to win.
Lacklustre campaign
But a lacklustre campaign allowed her Republican opponent - with vigorous support from conservative activists - to seize on voter discontent and overtake her in the final stretch.
Voters flocked to the polls through the snow and rain that fell all day on Tuesday.
Ms Coakley said she had received a telephone call from President Obama, who had told her: "We can't win them all."
White House spokesman Robert Gibbs said President Obama had called Mr Brown to congratulate him and to tell him he was looking forward to working with him.
Senate Democratic leader Harry Reid said he would welcome Mr Brown to the Senate.
He added that senators "will move to seat him as soon as the proper paperwork has been received" from Massachusetts officials.
Analysts say that with opinion polls showing nearly half of all Americans think President Obama is not delivering on his major campaign promises, the Massachusetts race could be seen as a referendum on his first year in office.
The vote may not bode well for the Democrats ahead of November's congressional elections.
Correspondents say if they cannot hang on to a party stronghold such as Massachusetts they could be vulnerable almost anywhere.
The result was the third major loss for Democrats in state-wide elections since Obama became president: Republicans won governors' seats in Virginia and New Jersey in November.
President Obama has made health care his main domestic issue, seeking to revamp an expensive system that leaves nearly 50 million people uninsured.
Republicans have almost unanimously opposed his plans, saying it would lead to higher taxes and government meddling in healthcare decisions.
