Bachelet won 62 percent of the vote, the most decisive victory in eight decades of Chilean elections. The center-right's Evelyn Matthei promptly congratulated her rival, saying: "I hope she does very well. No one who loves Chile can wish otherwise."
Bachelet needs the momentum of her resounding victory to strengthen her mandate and try to overcome congressional opposition to fulfill her promises.
The 62-year old pediatrician ended her 2006-2010 presidency with 84 percent approval ratings despite failing to achieve any major changes. This time however, activists are vowing to hold her to her promises, which include raising corporate taxes to 25 percent from 20 percent help fund an education overhaul and even change the dictatorship-era constitution, a difficult goal given congressional opposition.
Many Chileans complain policies imposed by Gen. Augusto Pinochet's 1973-1990 dictatorship have kept wealth and power in few hands. Pinochet effectively ended land reform by selling off the nation's water, and he preserved the best education for elites by ending the central control and funding of public schools.
"Michelle, you can have the certainty that from our side you're going to have a constructive and patriotic attitude," Pinera told Bachelet in a telephone conversation broadcast live on TV. "Beyond our differences, we all want the same — what's best for Chile."
This was Chile's first presidential election after voter registration became automatic, increasing the electorate from 8 million to 13.5 million of the country's nearly 17 million people. But voting became optional with the change, and only 50 percent of voters turned out in the first round, frustrating both the major coalitions. In the runoff, only 5.5 million voted — 41 percent turnout.
It also was Chile's first choice between two women, both with long careers in politics.
Bachelet and Matthei share a dramatic history: Playmates while growing up on a military base, they found themselves on opposite sides of Chile's wide political divide after the 1973 military coup.
Matthei's father became a member of Pinochet's junta while Bachelet's father was tortured to death for refusing to support the strongman. Bachelet, a moderate socialist, was imprisoned herself and forced into exile.
They remained cordial over the years while they rose through the ranks of the right and left.
Bachelet is known for her charisma and empathy, but her critics say she's made mistakes.
When a devastating earthquake struck in 2010 killing more than 500 people just 11 days before the end of her term, the national emergency office failed to issue a tsunami warning. Many coastal dwellers had figured they were safe, and failed to run to higher ground.
Chile is the world's top copper producer, and its fast-growing economy, low unemployment and stable democracy are the envy of Latin America. But many Chileans say more of the copper wealth should be used to fix the underfunded public education system.
"Abroad you often hear that this country has been growing and progressing more than others in Latin America, but it can't be just a matter of growth," Paola Bustamante, a 40-year-old sculptor, said after voting for Bachelet. "We need urgent educational reform, improvements to health, and I feel Bachelet can fulfill promises of deep changes this time around."