India's Mars Orbiter Mission has successfully entered orbit around the Red Planet on its first attempt.
Indian Prime Minister Narendra Modi announced that "India has successfully reached Mars. Congratulations to all, to the entire country ... history has been created today".
The mission was televised live to a nationwide audience from the agency's command centre in the southern city of Bangalore.
The success of the mission after its ten-month journey was touted by Mr Modi as a showcase for the country's home-grown and low-cost space technology.
In a televised address, Mr Modi said: "The amount our scientists have spent on this mission is even less than what they spend in making Hollywood movies."
At just $74m, the mission cost less than the estimated $100m budget of the sci-fi blockbuster 'Gravity'.
India's successful mission to the Red Planet sees it join an elite club that includes the United States, Russia and Europe.
The mission plans to study the planet's surface and scan its atmosphere for methane, which could provide evidence of some sort of life form.
The probe is expected to circle Mars for six months, about 500km from its surface.
Its scientific instruments will collect data and send it back to Earth.
Experts said the mission's main aim is to showcase India's budget space technology and hopefully snatch a bigger share of the $300bn global space market.
The mission cost just a fraction of NASA's MAVEN spacecraft, which successfully began orbiting the fourth planet from the sun on Sunday.
India has so far launched 40 satellites for foreign nations, since kick-starting its space programme five decades ago.
But China launches bigger satellites.
Critics of the programme said a country that struggles to feed its people adequately, and where roughly half have no toilets, should not be splurging on space travel.
In a tweet, the orbiter said hello to NASA's Mars Curiosity mission and said it would "be around".
Howdy @MarsCuriosity ? Keep in touch. I'll be around.
— ISRO's Mars Orbiter (@MarsOrbiter) September 24, 2014