Jammeh had conceded defeat, the chairman of the Independent Electoral Commission (IEC) said as Gambians began to take to the streets to celebrate the biggest upset in the west African nation since Jammeh seized power in a 1994 coup.
"It's really unique that someone who has been ruling this country for so long has accepted defeat," Alieu Momar Njie told reporters.
Barrow won 54.54 per cent (263,515 votes) while Jammeh took 36.66 per cent (212,099) and third party candidate Mama Kandeh 102,969 votes (17.80 per cent) in yesterday's poll, the IEC said.
Jammeh, who once said he would govern for a billion years if God willed it, was attempting to win a fifth term with his Alliance for Patriotic Reorientation and Construction (APRC).
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On the streets of Bakau, a district on the outskirts of the capital Banjul, Gambians began an impromptu street party, drumming, dancing and honking car horns.
"This man (Jammeh) beat and oppressed us," a young man who gave his name as Jawara told AFP. "We didn't have our freedom but definitely Barrow will give it to us," he added, choking back tears.
Gambian state television told AFP that Jammeh would make a statement later in the day to congratulate opposition leader Barrow, 51.
Barrow told AFP before the vote was announced that he was "certain" he had won.
If Jammeh's concession is confirmed, Barrow will likely serve a three-year term at the head of a transition reform government in the tiny ex British colony that occupies a narrow sliver of land surrounded by French-speaking Senegal and pristine Atlantic ocean beaches beloved by tourists.
Jammeh campaign manager Yankuba Colley said he was not aware of the electoral commission chairman's statement but said he believed the president would step down if the Gambian people wanted it.
But early results today were positive for Barrow as he took the capital Banjul -- a traditional Jammeh stronghold.
He won nearly 50 per cent of the vote in Banjul's three constituencies, according to the IEC, compared to 43 per cent for Jammeh.