After beating rival Robert Jenrick with 56.5 per cent of the membership vote, she declared it is "time to get down to business" to return her party to power.
Prime Minister Sir Keir Starmer said the result was a "proud moment for our country".
And Boris Johnson said she "brings a much needed zing and zap" to the Conservatives.
Mrs Badenoch, 44, signalled there will be a significant role for Mr Jenrick in her team.
In her acceptance speech, she told him: "You and I know we don't actually disagree on very much. And I have no doubt you have a key role to play in our party for many years to come." She warned activists who had gathered for the announcement in central London the party must be "honest" that it "made mistakes" and "let standards slip".
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