Daniel Andrews is Victoria's 48th premier after leading Labor to an easy victory over the one-term coalition government of Denis Napthine.
Dr Napthine, 62, had lagged behind the Labor leader for most of the campaign and could not convince the electorate that his government deserved another term.
Mr Andrews, who has vowed to get to work straight away because "I will not accept four more years like the last four", will likely hold a comfortable majority - possibly 48 - in the 88-seat lower house, where the Greens have also won their first state seat.
Before Saturday's election, the coalition held 44 seats in Victoria's 88-seat parliament, Labor 43, with one independent - the former renegade Liberal Geoff Shaw, who lost his seat of Frankston.
With about 50 per cent of the vote counted on Saturday night, there had been a swing to Labor, giving them 47 seats, leaving the Liberals with 30 (down from 34), the Nationals seven (10).
The Greens have won at least one lower house seat, taking Melbourne from Labor. They are also hopeful of securing another Labor seat in Richmond and there's a possibility of a third with Prahan.
Dr Napthine conceded defeat at about 10pm, despite no counting of most of the 1.1 million votes cast before election day.
But Dr Napthine said the writing was on the wall, making his the first one-term government in nearly 60 years.
"Therefore, it's appropriate for myself as leader of the government, as leader of the Liberal Party, to do the right thing by the people of Victoria and to contact Mr Andrews and inform him that I have conceded, that he has won this election," he told supporters at the Sofitel hotel before announcing he would quit as Liberal leader.
He did not lay blame for the defeat, but other commentators said the Abbott government had been toxic in Victoria and hurt the coalition.
Labor supporters at the party's function in Mr Andrews' seat of Mulgrave started the celebrations early in the night.
A banner featuring prospective premier Andrews in full electioneering mode, high-vis vest and furrowed brow, suddenly became the most popular spot for a selfie in the room.
Federal Opposition Leader Bill Shorten entered the Mulgrave country club, declaring Mr Andrews a "Labor hero".
"They said that a first-term government never loses. Please remember tonight for the rest of your lives because we are witnessing history in the making," he said.
In his victory speech, Mr Andrews committed himself to referring the ambulance pay dispute to the fair work commission and the back to work bill.
But he failed to mention "ripping up the contracts" for the controversial East West Link, which had been a cornerstone of his campaign.
"I will not waste even a single day delivering on each of the commitments that we have made, working hard to make sure that this is a fairer state, a more prosperous state, the progressive capital of our nation, the ideas capital of our nation."
