"Six years ago, I was the first female president, this time I am the first re-elected female president," a smiling and relaxed Ms Halonen said after her victory.
Known as “the mother of the nation", Ms Halonen won a second six-year term in office, with just 51.8 percent of the vote and business-like as usual, said that she "would just go back to work" on Monday morning.
Mr Niinistoe kissed his opponent’s hand as he conceded defeat, saying "The man has lost."
In return, Ms Halonen paid tribute to her rival's efforts, saying he had conducted "a good campaign".
"It was the best campaign ever in Finland," Mr Niinistoe added.
Mr Niinistoe, 57, a vice president of the European Investment Bank (EIB), and survivor of the 2004 Tsunami, had threatened Ms Halonen's re-election chances with a campaign claiming Finland needed a president who "understands globalisation."
The runoff poll, between the two contenders was necessary because Ms Halonen did not win an outright majority in the January 15 presidential election against eight rivals.
Unconventional leader
Ms Halonen is a product of her country's well-established social democratic traditions, but her unconventional profile makes her stand out from the crowd.
In 2004, her popularity surged to 94 percent - an almost unimaginable level for a western democracy and the highest score recorded in the country since it gained its independence in 1917.
The 62 year old, whose hobbies include belly dancing, is so popular that most Finns simply call her "Tarja".
Ms Halonen’s party, The Social Democrats have held the presidency in Finland since 1982.
The President, who is the head of state and commander-in-chief of the military, is not involved with day-to-day politics, rather the position focuses is foreign policy.