Opposition challenger Kolinda Grabar-Kitarovic has become the first female president of Croatia, winning by the narrowest of margins, the BBC reports.
She secured 50.5% of the vote with 99% of ballots counted, while incumbent Ivo Josipovic was close behind on 49.5%.
Mr Josipovic has conceded defeat and congratulated his opponent.
The challenger’s win is a sign that Croatia may be shifting to the right after the centre-left coalition’s failure to end six years of downturn.
The election was seen as a key test for the main parties ahead of parliamentary elections expected to be held towards the end of 2015.
The gap between the two candidates remained at about one percentage point throughout much of the second round.
Turnout was 58.9% – some 12% more than in the first round held two weeks ago, which was equally close.