Opposition leader Juan Carlos Varela has won the presidential election in Panama with almost 40% of the votes.
Mr Varela, who is currently the vice president, had distanced himself from President Ricardo Martinelli.
Correspondents say Mr Varela has taken credit for Mr Martinelli's economic success, but has promised a cleaner, more transparent government.
The president's preferred candidate, the governing party contender Jose Domingo Arias, came second.
President Martinelli had been an outspoken supporter of Mr Arias, 50, and his wife Marta Linares was the candidate's running mate.
In addition to picking a new president, the country's 2.5 million eligible voters were electing dozens of mayors and members of Congress.
Mr Varela, 50, had a falling-out with President Martinelli after he was dismissed from his post as foreign minister in 2011.
He is from one of Panama's richest families and will inherit an economy that has seen the fastest growth in Latin America in the last few years.
He will also be given oversight of a major expansion of the Panama Canal, which accounts for 8% of gross domestic product in the country.
Mr Martinelli, a supermarket magnate, has backed the canal expansion and other infrastructure projects that helped spur economic growth.
But his reputation was tarred by allegations that his government gave contracts and other favours to friends and business interests.
Mr Varela, who will be sworn into power on 1 July, alluded to the claims of corruption during his campaign, saying he would "not buy political backing".
He faces the challenge of maintaining buoyant growth while dealing with economic inequality, with a quarter of the population living in poverty.
Recent discontent has led to a nationwide construction strike over pay, which halted work on the canal and thousands of other projects.
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