President Mahinda Rajapaksa admitted defeat in the presidential election, his office said.
The statement said Rajapaksa "concedes defeat and will ensure a smooth transition of power bowing to the wishes of the people."
It also said Rajapaksa had left the official residence of the president and the new leader would be sworn in later on Friday, according to the BBC.
Rajapaksa was challenged by his health minister and longtime ally, Maithripala Sirisena, in a surprise move that was announced in November.
Official numbers were not yet in when Rajapaksa conceded defeat, but early results indicated Sirisena would win more than 50% of the votes.
Rajapaksa, who was first elected into office in 2005, was seeking his third term, after abolishing the two-term limit on the presidency.
He was credited by many with ending a 25-year civil war against the Tamil Tigers militant rebels in 2009.
Rajapaksa and Sirisena are both Sinhalese Buddhist, the majority ethnic group in Sri Lanka that accounts for 70% of the country's 21 million people.
Sirisena was believed to be able to earn more votes from the minority communities, which include Muslims, Christians, and Tamils, although he still needed a substantial number of votes from the majority group, who have usually come out in favor of Rajapaksa.
In both Jaffna and Trincomalee, where many Tamil live, turnout was higher than previous elections.
Sirisena has made no mention of minority rights and has said he will not allow political leaders to be prosecuted for alleged war crimes, BBC reported. Despite this, many saw him as the only way to unseat President Rajapaksa.
Sirisena said he was running because he felt the country was headed toward a dictatorship.
"The entire economy and every aspect of society is controlled by one family," Sirisena said.
Rajapaksa has three brothers, as well as his son, in positions of power.