Election Director Orrette Fisher told international media that based on preliminary results "it appears safe to say" that Simpson Miller's party will return to power.
The unofficial count showed that the PNP won 42 of the seats with the other 21 going to the JLP in the election that all pollsters had said would be too close to call.
In her victory speech on national television, Simpson Miller, 66, told Jamaicans, "We have plenty of work ahead of us."
She added, “I am humbled as I stand before you and I wish to thank the Jamaican people for their love, for their support and for giving the People's National Party and the leader of the party her own mandate.”
She also thankled Holness. “I want to thank the prime minister who called earlier to congratulate me, and he was very gracious,” Simpson Miller, who was first elected to parliament in 1976 and served as prime minister from 2006-07.
She pledged that there will be "growth and development with job creation," adding that there is a possibility of new austerity measures to deal with the huge debt burden, which includes a $1.27 billion bailout agreement with the International Monetary Fund.
"We will hide nothing from you," Simpson Miller promised. "When it is tough and rough we'll let you know. But I can also ensure you, as we move to balance the books, we will be moving to balance people's lives as well."
He added, “It is apparent that the people of Jamaica still have concerns about the JLP and we will reflect on that.” He also wished the new government well.
"They will face several challenges, but I hope for the benefit of the country they will do a good job.” Karl Samuda, the JLP campaign director, said: "We have done what we could on behalf of the people of Jamaica...There will be another day."
It was a stunning defeat for Holness, 39, the youngest person to lead the country. In 2007, the JLP under his predecessor, Bruce Golding, won the general election with 32 of 60 seats in the House of Representatives; the PNP took the remaining 28.
Holness, the former education minister, took office in October after Golding resigned amidst scandals and lack of public support.
Golding's public image was tarnished after he had a very public and futile battle over a request from the United States to extradite drug kingpin and gang boss, Christopher "Dudus" Coke, who was a known supporter of Golding's party.
The scandal hurt both Golding and the party and Holness was unable to salvage the trust of Jamaicans who felt more comfortable with a more experienced leader in Simpson Miller, who is fondly known as Sister P. The loss on Thursday was historic since it was the first one-term government in Jamaica since independence.
Simpson Miller was first elected to Jamaica's parliament in 1976 and became the island's first female Prime Minister when she took office from 2006 with the resignation of her predecessor, PJ Patterson.
She joins a short list of Caribbean women who have become leaders of their country including Eugenia Charles of Dominica, Guyana's Janet Jagan and Kamla Persad-Bissessar in Trinidad & Tobago whose People's Partnership coalition won a landslide victory in May 2010.
On Friday, Persad-Bissessar extended congratulations to Simpson Miller. "It is good to have another woman at the Caricom table," Persad-Bissessar said.
Opposition leader Keith Rowley also congratulated the new Jamaican leader, saying he looks forward to the good work of the PNP in Jamaica.
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