She is the third woman in history to hold the position, and the fourth consecutive UK Prime Minister from the Conservative Party.
The South West Norfolk MP won with 81,326 votes compared to 60,399 for Mr Sunak, a result which was announced today (5 September) by 1922 Committee Chair Sir Graham Brady at a gathering at Westminster.
She was widely tipped by bookies to come out on top in the leadership contest.
Following the announcement, Ms Truss addressed the crowd at Westminster - telling those gathered it was an “honour” to be elected and thanking those who had put their “faith” in her.
In her speech, she said: “I campaigned as a Conservative and I will govern as a Conservative.”
She then went on to cite her plans, including her intention to cut taxes, “grow the economy”, and deliver on the energy crisis - both by “dealing with energy bills and the long-term issues we have with energy supply.”
Ms Truss thanked her friends and family for their support, and thanked the 1922 Committee for “organising the longest job interview in history.”
She also mentioned outgoing Prime Minister Boris Johnson in her speech, referring to him as her “friend”.
The new Prime Minister said to her predecessor: “You got Brexit done, you crushed Jeremy Corbynn, you rolled out the vaccine and you stood up to Vladimir Putin.”
A formal handover will take place tomorrow (6 September), where Ms Truss will visit the Queen to be officially invited to form a government.
Outgoing Prime Minister Boris Johnson will make a farewell address outside 10 Downing Street at roughly 9am on the same day.
In the coming days, the former Foreign Secretary is expected to announce her Cabinet.
She will take part in her first session of Prime Minister’s Questions against the leader of the Labour Party, Sir Keir Starmer.
Yesterday, on the eve of the announcement, Ms Truss promised to unveil a plan to deal with the energy crisis within a week if she becomes Prime Minister - after calls for the Government to intervene to support the most vulnerable households amidst the cost of living crisis became increasingly loud.
On the BBC’s Sunday with Laura Kuenssberg, she said: "If I’m elected as Prime Minister, within one week I will make sure there is an announcement on how we are going to deal with the issue of energy bills and of long-term supply to put this country on the right footing for winter."
She added however that she cannot reveal “exactly what that announcement would be.”
Throughout the leadership race Ms Truss has pledged to cut taxes, but has received criticism for not promising increased financial aid for struggling families.