The People's Action Party (PAP) won an absolute majority of 83 seats in the 89-member Parliament.
The PAP's main rival -- the Workers' Party --- ended up with just six seats, less than the seven it held in the outgoing parliament. A number of smaller parties also ran.
The PAP, which has been ruling the city-state since independence in 1965, got 69.86 per cent of the popular vote, an increase of almost 10 percentage points from its share in 2011.
The victory dashed hopes of a two-party system emerging in Singapore.
"I am deeply humbled by the confidence Singaporeans showed in me and my team and the heavy responsibility voters have entrusted to us," Lee was quoted as saying by Channel News Asia.
Patriotic feeling over the death of long-term leader Lee Kuan Yew may have swelled the vote, analysts said.
This was the first general election after the death of Lee Kuan Yew, father of Prime Minister Lee.
"It's a good result for the PAP, but it is an excellent result for Singapore," Lee said.
Lee, the secretary general of the PAP, reiterated that he had called the election because Singapore was at a "turning point" and he needed a "fresh and clear mandate" to take the country forward.
The Prime Minister said it was time to "pull together to resume nation-building." The PAP would work with all Singaporeans, "including those who voted against us" to take Singapore forward, he said.
The opposition Workers' Party campaigned on a platform of providing an effective check on the PAP, but lost a constituency and saw its winning margins reduced in the few seats it retained.
The results cement the PAP's long-running political dominance in Singapore and highlight the long slog ahead for those pushing for political plurality.
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