With ballots counted in all but four of the nation's 4,260 polling stations, the Social Democrat candidate won 50.59 percent of Sunday's vote, compared to 20.72 percent for his nearest rival, Socialist lawmaker and poet Manuel Alegre, who ran as an independent.
Political veteran Mario Soares, 81, the candidate backed by the ruling Socialist government, came in third.
Mr Cavaco Silva’s win of more than 50 percent of the votes means he will now avoid a run-off poll on February 12.
Although the post of president is largely a ceremonial one, Mr Cavaco Silva’s win is a blow to the Socialist government of Prime Minister Jose Socrates, whose administration dominates parliament and leads the government.
The president has no power to legislate but can dissolve parliament, veto laws, call general elections and appoint the prime minister based on vote results.
Stagnant economy
Mr Cavaco Silva is the first president elected outside the left since Portuguese democracy was established in 1974 when a military coup toppled a repressive right-wing dictatorship that had ruled Portugal for nearly 50 years.
He campaigned on a pledge to tackle a stagnant economy and high unemployment in western Europe's poorest country.
Mr Cavaco Silva, who oversaw a period of economic growth as a centre-right PM between 1985 and 1995, has pledged to ensure the Socrates government carries out promised reforms intended to revive the economy.
An admirer of Britain's Margaret Thatcher, Mr Cavaco Silva was credited with introducing free-market reforms, which together with billions of dollars in European Union aid, helped lift living standards.
In a general election last February the Socialists won 45 percent of the vote, and an outright majority in the 230-seat parliament.
But recent polls show Mr Cavaco Silva's focus on the need for further reforms and his reputation for economic competence struck a chord with voters concerned about rising unemployment.
One-third of those who said they voted for the Socialists in the general election said they backed Mr Cavaco Silva for president, a poll published in the daily newspaper Jornal de Noticias on January 15 showed.
Socialist President Jorge Sampaio is stepping down after serving two consecutive five-year terms, the maximum allowed under the constitution.