The presidential post has the most ceremonial function, although the presidential election gives a hint of political developments in Croatia.
The 53-year-old Milanovic got just over 53 percent of the vote, while Grabar-Kitarovic got just under 47 percent in the second round, the country's electoral commission said.
Milanovic was prime minister in 2011-15, but lost the 2015 election after failing to implement promised reforms. As presidential candidate, he has promised to make Croatia a "normal" country with an independent judiciary and respect for minorities.
Kolinda Grabar-Kitarovic from the Conservative Party HDZ has targeted her election campaign on, among other things, unity and patriotism.