Preliminary official results showed the opposition National Party candidate, Lobo, with 56 percent of the vote over his main rival, Elvin Santos of the ruling Liberal Party.
Shortly before midnight, Santos conceded defeat, saying it is time for "unity, the only path to confront the future and ensure the victory of all Hondurans," Reuters reported.
All eyes also were on the level of turnout, which elections officials said was around 60 percent of registered voters -- considered a victory by the interim government under Roberto Micheletti, who had hoped a large turnout would bolster the legitimacy of the election in the international community, according to the Associated Press.
Micheletti took charge of the country after President Manuel Zelaya was forced out of office at gunpoint on June 28. Zelaya snuck back into the country in September, and has been hunkered down in the Brazilian Embassy in Honduras ever since.
His opponents say he was trying to change the constitution to extend presidential term limits, which he denies. Neither Micheletti nor Zelaya ran in Sunday's election.
After the vote, Zelaya said his own information from polling stations showed abstention was as high as 65 percent, indicating he might challenge the results, reported the AP.
On Wednesday, the Honduran Congress is scheduled to vote on whether Zelaya can return to the presidential palace to fill the rest of his term until the new president takes the oath of office on Jan. 27.
The United States has defended the election, with the U.S. State Department calling it "a necessary and important step forward", but leftist governments in Latin America say it means the first coup in Central America in 20 years would have succeeded. U.S. diplomats said that Hondurans have a right to choose their next leader in an election that was scheduled before Zelaya was ousted.
"The United States made a mistake," Zelaya told the AP from the Brazilian Embassy. "If they are democrats in their country, they should be democrats in Latin America."
Lobo, 61, a conservative landowner, urged leftist governments in the region to recognize the vote. "We ask them ... to see that they are punishing the people who went to vote, do so every four years and have nothing to do with what happened on June 28," he told reporters, reported the New York Times.
Lobo, who some view as a "law and order" candidate, is considered by many as more able than Santos to lead Honduras out of its political gridlock, according to Reuters.
But Lobo faces many challenges as president, starting with an election that has created a rift among Latin American countries, with Panama, Peru and Costa Rica backing the vote but Argentina, Brazil and Venezuela lining up against it.
Lobo also faces economic problems, exacerbated by the international isolation brought on by the coup. He vowed Sunday to end Honduras' isolation from countries like Brazil and international organizations such as the Organization of American States, which suspended Honduras' membership after the coup.
"Lobo is going to need a lot of support," said Michael Shifter, vice president of the Inter-American Dialogue, a Washington-based research group, quoted Bloomberg News. "No matter how committed and talented he is as a president-elect, he's going to need the support of sectors in Honduras and of the international community."