Political novice Yingluck, the sister of ousted former leader Thaksin Shinawatra, gained support from 296 members of the lower house out of a potential 500 -- reflecting the majority enjoyed by her party and its allies.
"Miss Yingluck gained more than a simple majority of support in this house, therefore Miss Yingluck was elected prime minister," said house speaker Somsak Kiatsuranont.
Yingluck's Puea Thai party and its partners command a three-fifths parliamentary majority after a resounding victory in the July 3 election over the pro-establishment Democrats. The country's 28th prime minister can expect royal endorsement within days to formalise her position.
She will face the immediate challenge of bringing stability to the kingdom, after five years of political turmoil since her brother Thaksin Shinawatra was thrown out of office in a 2006 army coup backed by Thailand's elites.
"We are still in the middle of a very big conflict in the country with very different ideas about what government should be, and what it should be doing," said Thai political analyst Chris Baker.
Analysts believe a key test for Yingluck will simply be whether she can hang on to power in a country where the removal of leaders is commonplace.
Thailand has seen 18 actual or attempted military coups since it became a constitutional monarchy in 1932 and only one prime minister in that time has served a full four-year term -- Thaksin.
Yingluck, described by her brother as his "clone", surprised observers with her assured campaign style, helping her party to a crushing win in last month's election.