"Tonight is a victory for courageous conservatives," he declared, to
great applause, as he railed against Washington, lobbyists and the
media.
He took 28% of the Republican vote, beating his rival, the once frontrunner Donald Trump, and Marco Rubio.
Votes in the Democratic race are still being counted, and some US media have declared it a dead-heat.
With
95% of results confirmed, Hillary Clinton clung to the narrowest of
leads over Bernie Sanders and told supporters she was "breathing a sigh
of relief".
The former secretary of state and first lady stopped
short of declaring victory, and her rival, a 74-year-old senator from
Vermont said it was a "virtual tie".
No
such ambiguity from Republican victor Mr Cruz, whose triumph was reward
for the months he spent criss-crossing the state to woo its influential
conservative and evangelical leaders.
As
country music blared across the loud speaker at his Des Moines rally,
the 45-year-old fiery conservative, who has been a thorn in the side of
his party, relished his victory.
In the end it was a victory for organisation over enthusiasm. Despite
trailing Donald Trump in the polls for much of the last two weeks, Ted
Cruz swept to a comfortable win in Iowa.
During his victory
speech, he repeatedly thanked his grass-roots support - and for good
reason. He and his campaign had invested considerable time and money to
grind out a victory in this key state, and they were ultimately rewarded
for their efforts.
With this result Mr Cruz now has the momentum
to survive what looks to be an uphill battle among the more moderate
voters in New Hampshire and then win over the deeply conservative,
evangelical voters of Southern states that dominate the primary calendar
in the following weeks.
It appears increasingly likely that a
showdown for Mr Cruz looms on the horizon with the surprise third-place
finisher in Iowa, Senator Marco Rubio. And Mr Trump - even if his
supporters didn't turn out in the numbers expected - will surely remain a
factor.
Mr Trump congratulated the Texas senator and said he was "honoured" by the second-place finish.
Mr
Rubio, who has struggled to gain traction in recent months, has
performed far better than expected, and finished in third place - just
one percentage point behind Mr Trump.
Meanwhile, two candidates are bowing out.
Sources
close to Democrat Martin O'Malley, former Maryland governor, have told
the BBC that he will suspend his campaign - narrowing the field to two
competitive candidates.
On the Republican side, Former Arkansas Governor Mike Huckabee tweeted that he too would suspend his campaign.
Iowa has an unusual election system called a caucus, which involves
people gathering at private homes, schools and other public buildings
across the state.
Democratic voters divide themselves into groups
based on their preferred candidate, but the Republican caucus process
is more like a traditional ballot.
Over the coming months, the other 49 states as well as US territories will vote for the party nominees.
Each states' delegates will be tallied and a nominee will become apparent as the summer draws near.
In November, the US will pick who its next president will be. He or she will assume office in January 2017.
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