North Korea forced itself as an issue in the closing days of campaigning with the rocket launch, although many voters said they cared more about economic worries.
Park has said she is open to dialogue with North Korea, but she has also called on Pyongyang to show progress in nuclear dismantlement for better relations with Seoul. North Korea describes Park's stance as "deceptive," saying her North Korea policy is the same as Lee's.
Park has also raised the possibility of a meeting with North Korean leader Kim Jong Un, but only if it's "an honest dialogue on issues of mutual concern."
After Moon conceded defeat, Park said that she would dedicate herself to improving public livelihood and achieving national unity.
"I really thank you. This election is the people's victory," Park told a crowd packing a Seoul plaza.
With about 98 percent of votes counted, Park had won 51.6 percent to Moon's 47.9 percent, according to the state-run National Election Commission. Park is to take office in February when Lee ends his single five-year term.
No Korean woman is believed to have ruled since the ninth century. Park becomes the most powerful figure in a country where women are often paid less than men, are often trapped in low-paying jobs, despite first-class educations, and often struggle to raise families and pursue careers.
Analysts said her victory shows women can thrive in South Korea's tough political world.
Park will govern under the shadow of her father, who is both an asset and a soft spot. Many older South Koreans revere his strict economic policies and tough line against North Korea. But he's also loathed for his odious treatment of opponents, including claims of torture and snap executions.
Park's win means that South Korean voters believe she would evoke her father's strong charisma as president and settle the country's economic and security woes, according to Chung Jin-young, a political scientist at Kyung Hee University in South Korea.
"Park is good-hearted, calm and trustworthy," 50-year-old housewife Lee Hye-Young said at a polling station at a Seoul elementary school. "Also, I think Park would handle North Korea better. Moon would want to make too many concessions to North Korea."
- AP