Sen. Hillary Clinton has narrowly won the New Hampshire primary, becoming the first woman -- and the first-ever former first lady -- to win the first-in-the-nation contest.
Clinton beat out Sen. Barack Obama, who, riding a wave of momentum from his Iowa caucus victory, battled for a close second place in the Granite State.
Never thought to be a major factor in New Hampshire, former North Carolina Sen. John Edwards came in a distant third in the state and will now focus his limited resources on South Carolina, where he won in 2004.
After a devastating third place finish in Iowa, the narrow victory in New Hampshire allows Clinton to claim a comeback of sorts, a narrative that fits well with her husband's surprise 1992 finish in New Hampshire that led to his nickname "The Comeback Kid."
The tight race has also secured Obama as a formidable opponent for Clinton, setting up what may become a bloody political battle between the two Democratic rivals going into the big-state primaries Feb. 5.
"I come tonight with a full heart," Clinton told a crowd of supporters in Manchester. "Over the last week, I have listened to you, and in the process I found my own voice.
"Together let's give America the kind of comeback that New Hampshire has just given me," Clinton said, as supporters chanted "Comeback Kid!"
"We're going to take what we learned here in New Hampshire and make our case," she said. "We are in it for the long run!"
Over the course of 24 hours, the Clinton campaign has gone from despair and bitterness to euphoria, buoyed by victory in New Hampshire.
"We're back," Clinton pollster Mark Penn told ABC News.
Looking tired and disappointed, Obama conceded victory to Clinton, speaking to a crowd of supporters who were yelling, "We want change!"
"You can be the new majority who can lead this nation out of a long political darkness -- Democrats, Independents and Republicans who are tired of the division and distraction that has clouded Washington," Obama said.
"If we mobilize our voices to challenge the money and influence that's stood in our way and challenge ourselves to reach for something better, there's no problem we can't solve -- no destiny we cannot fulfill," he said.
Both Obama and Edwards called Clinton Tuesday night to congratulate her.
Introducing her husband at a rally in Manchester, Elizabeth Edwards said, "The goal is still in sight."
Conceding defeat in the Granite State, Edwards congratulated both Obama and Clinton but vowed to continue his campaign.
"Two races down, 48 states left to go," Edwards said before a crowd of supporters.
Long before the final count came in for the Democratic primary in New Hampshire, New Mexico Gov. Bill Richardson took to the stage at his rally in Manchester admitting defeat for a second time but refusing to bring his campaign to an end.
"We head out west and the fight goes on," Richardson told the cheering crowd of about 150 supporters.
Hours before her victory in New Hampshire, Clinton made a major shake up in the top echelons of her campaign.
Maggie Williams, Clinton's former chief of staff from her days as first lady, was tapped to take the reins of the campaign and will be in charge of day-to-day operations.