Conservative leader Stephen Harper knocked out Prime Minister Paul Martin in Monday's election but must form a coalition with Quebec separatists and left-wing New Democrats after failing to grab a parliamentary majority.
"Outsider comes in," declared the Toronto Star newspaper, as pundits chewed over the choice of voters who denied Liberals a fifth straight election win.
Some are already predicting a fragile government and new polls within two years, with what newspapers described as a "pizza parliament" or a Balkanized House of Commons sliced between four major parties.
Mr Martin formally tendered his resignation to Canada's de-facto head of state Governor General Michaelle Jean Tuesday, but will stay on for up to two weeks before Mr Harper is sworn in. He has also said he will stand down as the Liberal Party leader.
The prime minister-elect was returning to Ottawa from his headquarters in the western city of Calgary, and was expected to make a short statement later in the day.
Mr Harper, who put a fresh face on his prickly image and tracked to the center ground to dodge Liberal attacks, denies opponents' claims he is a closet extremist in thrall to US social conservatives.
Vote for change
"Our great country has voted for change," said Mr Harper, a 46-year-old economist who reunited Canada's fractious right wing before setting course for power, avenging his defeat to Martin in the last election 18 months ago.
"Canadians have asked our party to take the lead in delivering that change. We will honor your words and deliver on our commitments," said Mr Harper.
"Shuffling the deck in Ottawa is not good enough," he said, vowing that his minority administration would cut consumption taxes and cleanse government.
Mr Harper has promised to strengthen the military and signalled a willingness to review the Canadian decision not to join the US anti-missile shield.
The White House congratulated Mr Harper on his win.
"The United States and Canada have a strong and bilateral relationship, and we look forward to strengthening our relations and working with the new government," White House Scott McClellan said.
Liberals had charged that Mr Harper would renege on Canada's commitments under the Kyoto climate accord and would lean closer to the US Republican Party than most Canadians would like, saying that a Harper victory would put a "smile" on Mr Bush's face.
Seat numbers
The Conservatives won 124 seats in parliament; the Liberals held 103; the New Democrats, 29; and the separatist Bloc Quebecois, 51. There was one independent.
The Conservatives scooped 36 percent of the popular vote, and turnout was 65 percent of eligible voters in the vast country's first winter election in 27 years.
New Democrat leader Jack Layton said his party would find ways to work with the Conservatives, but he said Canadians had selected his party, which increased its seat tally from 18 to 29, to "balance" the new government.
Among the new MPs was renowned Harvard academic and human rights champion Michael Ignatieff, who won his Toronto-area seat for the Liberals and has been tipped by some experts as a possible future prime minister.
Liberals, thwarted in their bid for a fifth straight election win, were left to sift through the ashes of their losing campaign, after ceding ground to the Conservatives in their heartland in Ontario, Atlantic Canada, and in Quebec.
Mr Martin, a millionaire ex-shipping tycoon, had desperately hoped voters would undergo a polling booth conversion and balk at entrusting the Conservatives with power.
Since Mr Martin took over in 2003, the Liberals have become a shadow of the political machine which bulldozed to four straight election victories, including three under retired prime minister Jean Chretien.