Defeated opposition candidate Muharrem Ince said Turkey was now entering a dangerous period of "one-man rule".
Mr Erdogan polled nearly 53% in the most fiercely fought election in years.
Mr Ince received just 31%, despite a lively campaign attracting huge crowds.
Mr Erdogan, 64, has presided over a strong economy and built up a solid support base. But he has also polarised opinion, cracking down on opponents and putting some 160,000 people in jail.
Congratulations have come in from around the world, though some Western leaders have been slow to react. Russian President Vladimir Putin talked of Mr Erdogan's "great political authority and mass support".
In his victory speech on Monday morning, Mr Erdogan vowed to bring in the new presidential system "rapidly".
The constitutional changes were endorsed in a tight referendum last year by 51% of voters.
They include giving the president new powers to:
- directly appoint top officials, including ministers and vice-presidents
- intervene in the country's legal system
- impose a state of emergency
Some critics argue that Turkey's new system lacks checks and balances.
Mr Erdogan says his increased authority will empower him to address Turkey's economic woes and defeat Kurdish rebels in the country's south-east.
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Mr Erdogan was prime minister for 11 years before becoming president in 2014. Under the new constitution, he could stand for a third term when his second finishes in 2023, meaning he could potentially hold power until 2028.
Mr Ince, from the Republican People's Party (CHP), said the election was unfair from its declaration to the announcement of the results.
"We have now fully adopted a regime of one-man rule," he told journalists after the vote.
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