With all results in, Obama took more than twice as many votes as Hillary Clinton, winning 55% of the vote against her 27%. The win - which far exceeded expectations - was the first time any candidate has won more than 50% of the vote in any of the four primary contests.
John Edwards came in a distant third in his home state, on 18%, frustrating his hopes of making a comeback ahead of Super Tuesday.
At a raucous victory party in Columbia, Obama told supporters that the results proved his first victory in Iowa was no fluke.
"Tonight the cynics who believe that what began in the snows of Iowa was just an illusion were told a different story by the good people of South Carolina," he said. "We have the most votes, the most delegates, and the most diverse coalition of Americans we've seen in a long, long time."
Obama's candidacy received an additional validation with an endorsement from Caroline Kennedy, the only surviving child of the late John F Kennedy.
"Over the years, I've been deeply moved by the people who've told me they wished they could feel inspired and hopeful about America the way people did when my father was president," she wrote in an opinion piece for Sunday's New York Times. "This sense is even more profound today. That is why I am supporting ... Barack Obama."
But despite the jubilant crowds at his victory party, Obama was still visibly angry over his battering by Bill and Hillary Clinton in a negative and divisive campaign that sought to marginalise him as an African-American candidate.
The crowd chanted "Race doesn't matter". But race did play a part. Obama took 78% of the African-American vote but did poorly among white voters, except for those below the age of 24.
The negative campaign also backfired against the Clintons by alienating African American women. They supported Obama.
Even so, Clinton, though a distant loser, attracted a wider coalition than Obama. "It's wonderful to have such a broad cross-section of people across this state," she told supporters in Nashville.
Adopting an upbeat manner, she looked ahead to the Super Tuesday contests and tried to shrug off the negative and divisive campaign she left behind.
Her husband, who was an equal partner in the negative campaigning against Obama, sounded a more combative note.
"He won fair and square," Bill Clinton told a rally in Independence, Missouri. "Now we go to February 5 when millions of Americans finally get into the act."
Edwards, despite his distance third place showing - and a near total rejection by African-American voters - vowed to fight on. "Now the three of us move on to February 5," he said. However, it seems even less likely now that his cash-strapped campaign can make an impact on the more than 20 different battleground states
While Clinton remains the favourite to come out on top on February 5, when 22 states are up for grabs, the win in South Carolina could help Obama narrow the poll gap. He now goes into contests in Georgia and Alabama with a demonstrated advantage.
Obama is not the first African-American candidate to do well in South Carolina. Jesse Jackson secured an equally convincing victory in the 1988 Democratic primary, taking 54% to Al Gore's 19%, but failed to win the nomination.
However, Clinton remains weakened by her failure to win over African American women. She also performed poorly among white male voters.
© Guardian News and Media Limited 2008