Mitsotakis, 47, defeated 62-year-old former parliament chief Vangelis Meimarakis yesterday who had been considered the favourite in the race after grabbing an 11.3-point lead in the first round of voting last month.
The Harvard-educated economist now faces the challenge of taking on charismatic leftist Prime Minister Alexis Tsipras, who beat New Democracy twice in elections last year.
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The party has not announced results but Meimarakis has already conceded defeat.
Meimarakis took an early start but Mitsotakis later jumped ahead, evidently picking up the voters of two other candidates who were eliminated in the first round.
The son of former prime minister and New Democracy chief Constantine Mitsotakis, the new party leader is an ardent reformer who champions "common sense against populism."
He has pledged to realign the party towards the political centre.
"I stand for meritocracy, transparency and equal opportunities," Mitsotakis told Kathimerini daily in an interview a day before the vote.
"I guarantee that we will soon create a great centre-right movement that will give Greece a reliable alternative solution in government," he said.
New Democracy has been without an elected leader since July, when party head Antonis Samaras abruptly resigned, leaving Meimarakis in charge.
Mitsotakis has shrugged off criticism that he got this far thanks to his family connections. His father Constantine Mitsotakis headed the party from 1984 to 1993 while his sister Dora Bakoyannis is a former Athens mayor and ex-foreign minister.
"I am proud of both my name and surname," Mitsotakis said in a recent interview.
"I feel that I am better suited for the job," he said.
Mitsotakis has been accused of excessive job-cutting zeal during his term as administrative reform minister in 2013-2015.
"I found this policy in place, I applied it as best I could," he insisted this week.
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