"This morning at 4:26 am (0326 GMT), a 51-centimetre (20-inch) long and 3.28 kilogramme (7.23-pound) very sweet little princess was born," the newborn's father Prince Daniel announced at a press conference at Karolinska Hospital.
"My feelings are all over the place right now," he said, adding that both mother and child were doing well.
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The couple had arrived at hospital just before 1:00 am, and left with their new daughter some eight hours after the birth.
Two 21-gun salutes were fired on the Skeppsholmen island opposite the royal palace in Stockholm at midday, the two rounds signifying the birth of a future heir to the throne.
Other salutes were to be fired in several locations across the country on Friday.
Victoria, 34, and Daniel, 38, her former personal trainer and gym owner, married in a fairytale wedding on June 19, 2010.
The baby is the first grandchild for King Carl XVI Gustaf and Queen Silvia.
"We are very happy for the Crown Princess and Prince Daniel. We recall our own joy upon becoming parents and we wish the new family a wonderful time in peace and quiet. This is a much longed-for grandchild and we are both very proud and happy today," the king and queen said in a statement.
The crown princess, who is first in line to the throne and who will one day become Sweden's third regent queen, is wildly popular in Sweden thanks to her easy-going, down-to-earth style and the professionalism she has displayed in her role.
A nature lover, she is often seen casually dressed in jeans or sportswear, her long brown hair pulled back in a simple ponytail.
Several surveys in the past year have shown a majority of Swedes would prefer her to her father, who was embroiled in several scandals last year, as head of state.
Royal expert Sten Hedman said the birth was exactly what the royal family needed right now.
"The royal court needs a little baby, that's what everyone has been longing for. The king has gone through a rough patch and the whole family has suffered, and I think most of Sweden thinks this is good news," Hedman told Swedish news agency TT.
The king made headlines in November 2010 when an unofficial tell-all biography alleged he had an affair with Swedish pop singer Camilla Henemark -- a claim he never really denied -- and that he visited strip clubs and even had indirect contact with organised crime.
The monarch said later in an interview with TT that the scandal had "of course hurt confidence in me, and even confidence in the monarchy and also Sweden."
"That is something I really regret, but it is something I will fix, and I will work twice as hard in the future," he said.
The baby's name was meanwhile due to be announced on Friday, after the future regent is formally presented to the prime minister, speaker of parliament and the marshal of the realm.
Media and betting sites speculated wildly Thursday about the choice of name.
According to TT, some likely ones include Christina, Desiree, Ulrika, Astrid, Margareta or Sophia, all of which are names used by the Swedish royal family in the past. Alice, the name of Victoria's late maternal grandmother, was also among the possibilities.
Swedish Prime Minister Fredrik Reinfeldt noted that the Scandinavian country could now look forward to a succession of female regents, a first in Swedish history.
"It is a great day for the entire royal family and it is also a great day for Sweden," he said in a statement.
"With the birth of a new princess, the Kingdom of Sweden will in time enter a new era of queens," he said.
