Brazil will become the first South American country to host the Olympics, after the city of Rio de Janeiro was chosen to stage the 2016 Games.
Rio won a majority of the 95 votes at the meeting in Copenhagen, eliminating Madrid in the final round. Tokyo and Chicago had been knocked out earlier.
Earlier, Brazil's president told IOC members "it was time to light the Olympic flame in a tropical country".
Chicago's early exit was a surprise, with bookmakers making them favourites.
Rio's presentation to the International Olympic Committee delivered a passionate appeal for South America to be awarded the Games.
Brazilian President Luiz Inacio Lula da Silva told the meeting: "Rio is ready. Give us this chance and you will not regret it."
"Rio will deliver an unforgettable Games. You will see for yourselves the passion, the energy and the creativity of the Brazilian people."
President Lula said 2016 was an opportunity for the IOC to show that the Games belonged to people of all continents.
"I truly believe this is Brazil's time. For the others, it would be just another Games," he added.
"It will not be just Brazil's Games but South America's. It will serve to inspire the 180m young people on the continent. It is time to redress the balance."
Madrid's surprising success in reaching the final round came after former IOC president Juan Antonio Samaranch made an emotional appeal for votes.
"I know that I am very near the end of my time. I am, as you know 89 years old. May I ask you to consider granting my country the honour and also the duty to organise the games in 2016," he said.
However, a win for Madrid would have made it three European-based Olympics in a row, with London 2012 and Sochi 2014 preceding it.
