The AKP party founded by the divisive strongman, who has dominated Turkish politics for more than a decade, won 49.4 per cent of the vote to secure 316 seats in the 550-member parliament with nearly all votes counted, easily enough to form a government on its own.
The result is huge personal victory for 61-year-old Erdogan, who may now be able to secure enough support for his controversial ambitions to expand his role into a powerful US-style executive presidency.
Erdogan said voters had chosen "unity and integrity" in his first comments after the polls, although analysts said his surprise victory was largely down to mounting concern over renewed violence with Kurdish militants and a surge in bloody jihadist attacks.
"Our people clearly showed in the November 1 elections that they prefer action and development to controversy," Erdogan said in a statement.
Speaking to thousands of people who waited for hours in the cold to hear him speak from the balcony of the AKP headquarters in the capital, the premier vowed to protect the human rights of all of Turkey's 78 million inhabitants.
"You saw the dirty games played in our country, and you have changed the game," Davutoglu said.
The political landscape has changed dramatically in Turkey since June, with the country even more divided along ethnic and sectarian lines.
Analysts said it appeared voters had turned away from nationalist and Kurdish parties, after the collapse of a truce with outlawed Kurdistan Workers' Party (PKK) in July prompted a surge in bloody attacks.
Support has also fallen for the HDP, which some accuse of being a front for the rebels, and the party only just managed to scrape past the electoral threshold of 10 per cent to stay in parliament yesterday.
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