Parker defeated former city attorney Gene Locke with 53.6 percent of the vote Saturday in a race that had a turnout of only 16.5 percent.
"This election has changed the world for the gay, lesbian, bisexual and transgendered community. Just as it is about transforming the lives of all Houstonians for the better, and that's what my administration will be about," Parker told supporters after Locke conceded defeat.
Parker, 53, has never made a secret or an issue of her sexual orientation. But it became the focus of the race after anti-gay activists and conservative religious groups endorsed Locke and sent out mailers condemning Parker's "homosexual behavior."
Locke, 61, tried to distance himself from the anti-gay attacks while courting conservative voters who could tip the election in his favor. Meanwhile, gay and lesbian political organizations nationwide rallied to support Parker by raising money for her campaign and making calls urging people to vote.
Several other U.S. cities, including Portland, Ore., Providence, R.I., and Cambridge, Mass., have openly gay mayors, but none as large as Houston.
A little more than 152,000 residents turned out to cast ballots in the nation's fourth largest city, which has a population of 2.2 million. Of those voters, 81,743 chose Parker -- some 11,000 votes more than Locke received.
Although Locke condemned the anti-gay rhetoric, two of his key supporters contributed money to a conservative political action committee that sent out an anti-gay mailer earlier this month, urging voters not to pick Parker because she was endorsed by the "gay and lesbian political caucus."
Campaign finance reports show Ned Holmes, finance chairman of Locke's campaign, and James Dannenbaum, a member of the campaign's finance committee, each gave $20,000.
Late Saturday, Locke offered his congratulations to Parker and urged the city to move on from the bruising campaign fight.
"Here's what our city needs now: It needs unity. It needs us to come together and heal like we've never healed before, and to move forward under a new administration," he said.
Parker and Locke, both Democrats in the nonpartisan race, advanced to the runoff after garnering more votes than two other candidates on Nov. 3. Parker will succeed Bill White, who is term-limited after serving six years and is seeking the Democratic nomination for governor.
Houston is predominantly Democratic and about 25 percent black and one-third Hispanic. About 60,000 of its residents identify themselves as gay or lesbian.