Georgian President Eduard Shevardnadze has resigned amid massive protests over disputed election results.
Many Georgians hailed 'people power'
He announced the move after opposition leader Mikhail Saakashvili gave him an ultimatum to quit at talks mediated by Russian Foreign Minister Igor Ivanov.
Nino Burdzhanadze - another opposition leader - will serve as acting president until new elections in 45 days.
US Secretary of State Colin Powell has already telephoned Mrs Burdzhanadze to offer Washington's support.
There was wild cheering and hooting on the streets of Tbilisi as opposition supporters celebrated into the early hours of Monday morning.
Families, pensioners and children hugged each other and waved flags.
Age 35, lawyer
Studied in US and France
Former head of Tbilisi council
2000: Appointed justice minister by Shevardnadze
2001: Quit government
2001: Formed United National Movement
Pro-Western, radical reformer
"I feel really powerful - and happy," one reveller told the BBC.
"We did what we wanted. This is our freedom," said another.
Georgia's political crisis came to a head on Saturday when opposition supporters stormed parliament.
Hustled from parliament, Mr Shevardnadze then declared a state of emergency and threatened to use the military to restore order.
Announcing his resignation on national television, Mr Shevardnadze said: "I have never betrayed my people
and I am stating now, too, that it is probably better for
the president to resign, so all this can end peacefully and
there is no bloodshed and no casualties."
But the BBC's Chloe Arnold, in Tbilisi, says the key to the president's downfall was that the army withdrew its support.
Mr Saakashvili said he would be working alongside Ms Burdzhanadze, with help from Mr Shevardnadze, to maintain stability and peace in Georgia.
He also reiterated pledges to guarantee the safety of Mr Shevardnadze and his family.
"By his resignation, he avoided spilling blood in the country... History will judge him kindly," he said.
The European Union has expressed hopes for a peaceful handover of power.
"We wanted this crisis to be solved peacefully and it seems that
the situation has gone in that direction," said Cristina
Gallach, a spokeswoman for EU foreign
affairs envoy Javier Solana.
The US secretary of state looked forward to working with Interim President Burdzhanadze "in her effort to maintain the integrity of Georgia's democracy as she strives to ensure that this change in government follows the constitution," a State Department statement said.
"The United States and the international community stand ready to support the new government in holding free and fair parliamentary elections in the future," the statement said.
Correspondents say when Mr Shevardnadze first became leader of Georgia in 1992, he was praised for ending the anarchy that threatened to engulf the newly-independent country following the break-up of the Soviet Union.
But the once popular and admired leader is now seen by many Georgians as a failure who allowed corruption to flourish and poverty to spread under his rule.
It was the culmination of weeks of protests over the elections.
Regional analyst Tom de Waal says that Mr Shevardnadze's resignation does mark the end of the immediate crisis - but warned problems could lie ahead.
"We're now facing a group of inexperienced politicians coming to power on this wave of euphoria, but they're totally untested," Mr de Waal told the BBC's Newshour programme.