Serbian political parties are expected to start negotiations on the formation of a new government after the surprise win of nationalist Tomislav Nikolic in presidential polls.
Mr Nikolic upset the odds to defeat incumbent Boris Tadic but vowed to pursue his predecessor's drive for the Balkans nation to join the European Union.
Tomislav Nikolic is a one-time ally of the late Serbian leader Slobodan Milosevic.
Thousands of Nikolic supporters gathered in central Belgrade and other Serbian towns late Sunday, honking their horns in celebration.
Mr Tadic quickly conceded defeat congratulating Mr Nikolic, who promised to steer a pro-European course, on "a fair and well-earned victory".
"Serbia will not turn away from the European path," Mr Nikolic said.
But a recent convert to the EU cause he has warned in the past he would not join the 27-member bloc at any cost, making a breakaway Kosovo the red line for EU membership.
Mr Tadic, 54, who brought the once international pariah state to the European Union's doorstep, warned it would be a "tragic mistake" if Serbia abandoned its EU course.
Serbia got EU candidacy status in March but has not yet been given a date to open membership talks.
To get into Brussels' good books Mr Tadic handed over last year the last remaining fugitives from the UN war crimes court hiding in Serbia, Bosnian Serb general Ratko Mladic and Croatian Serb leader Goran Hadzic.
He also agreed to talks between Belgrade and Pristina aimed at improving relations between Serbia and Kosovo - a key condition for EU integration.
Surveys conducted just ahead of the second round had projected that Mr Tadic, the Democratic Party leader, would win comfortably with up to 58% of the vote.
"This was an electoral earthquake, a totally unexpected result," political analyst Slobodan Antonic said on Serbia's RTS state television.
While the ruling parties did well in parliamentary elections two weeks ago "maybe voters now decided it was the time to punish them a bit", he said.
Other analysts blamed the low turnout of 46.86% of voters and the high number of invalid votes at some 3% for the upset.
