Bill Tynan retained the seat for his party with 15,965 votes - a majority of 10,775 - and John Wilson of the Scottish National Party was in second place with 5,190 votes.
John Oswald of the Liberal Democrats was third on 2,381 votes and Neil Richardson of the Conservatives fourth with 1,876.
" The electorate of Hamilton South are intelligent and decided in the best way possible that they do not wish the SNP's separatist policy "
Gena Mitchell of the Scottish Socialist Party polled 1,187 and Janice Murdoch achieved 151 votes.
The turnout of 26.750 was down by over 13% on the 1997 general election and there was a 3.85% swing to the SNP.
Mr Tynan held the seat which he won at a September 1999 by-election, caused when sitting MP George Robertson was appointed secretary general of Nato and elevated to the House of Lords.
A disappointed Mr Wilson said: "The loser in this campaign has been democracy.
"In future New Labour should remember that if it wants the continued support and encouragement of the Scottish electorate it has got to reciprocate by keeping the pledges it makes."
" We have seen a swing from the Labour Party to the SNP and I am very confident that the SNP's share of the vote will increase tonight "
But Mr Tynan described it as "a wonderful victory", saying: "In this game you are either a good loser or a bad one.
"I'm disappointed the SNP candidate did not lose with dignity.
"All he could do was reply in the usual SNP jargon, but the electorate of Hamilton South are intelligent and decided in the best way possible that they do not wish the SNP's separatist policy."
Scottish Labour campaign strategist, Wendy Alexander said: "I am delighted for Bill Tynan. That is a decisive victory."
Scottish National Party Leader John Swinney said: "From the first result at Hamilton South we have seen a swing from the Labour Party to the SNP and I am very confident that the SNP's share of the vote will increase tonight."
He added that the party was determined to establish it as a two-horse race between the SNP and Labour in Scotland.