John McCain conceded defeat in a gracious speech urging his supporters to throw their weight behind the new president.
With running-mate Sarah Palin at his side, the 76-year-old Republican leader said Barack Obama had prevailed in what had been a "long and difficult" contest.
Addressing a subdued crowd in his home state of Arizona, Mr McCain said it was natural to feel disappointed, but called on all Americans to come together to bridge their differences.
Pledging to do everything in his power to help the new president in any challenge, Mr McCain said: "I urge all Americans who supported me to join me in not just congratulating him but offering our next president our goodwill and earnest effort to find ways to come together, to find the necessary compromises to bridge our differences and help restore our prosperity, defend our security in a dangerous world and leave our children and grandchildren a stronger, better country than we inherited. Whatever our differences we are fellow Americans."
The former Vietnam prisoner of war said Mr Obama's victory was historic and had a particular significance for African Americans.
He said Mr Obama had inspired hope in millions of Americans who had once believed they had little influence in the election of an American president.
This is "something I deeply admire and commend him for achieving," he said.
But he insisted America today was "a world away from the cruel and spiteful bigotry" of a century ago.
"There is no better evidence of this than the election of an African-American to the presidency of the United states," he said.
Offering his condolences to Mr Obama for the death on Sunday of his grandmother, Mr McCain said he regretted that she had not lived to see her grandson achieve such "a great thing for himself and his country".
