Her 18-year reign as party leader has come to an end, but she will serve out her term as the German chancellor.
Kramp-Karrenbauer, 56, will now lead the CDU into the next general election and as the leader of Germany's largest party, is in pole position to become the next chancellor.
Often dubbed "mini Merkel", she is a close ally of the chancellor has largely supported her open door policy on refugees.
Merkel has been widely criticised for allowing one million people allowed to settle in the country, a policy that has been blamed for tensions and the rise of the far-right.
But Kramp-Karrenbauer has questioned whether Germany's large Turkish minority should he allowed to hold joint citizenship and said migrants should make more of an effort to integrate.
She won 517 of the 999 votes cast and narrowly defeated Friedrich Merz, a millionaire lawyer, who received 482 votes at the party conference.
As the result was announced, she became overcome with emotion and struggled to hold back tears.
"I have read a lot about what I am and who I am: 'mini', a copy, simply 'more of the same'," she said in her passionate victory speech.
"Dear delegates, I stand before you as I am and as life made me and I am proud of that."
AKK – as she is widely known – grew up in a Catholic family in Saarland in south-western Germany, the country's smallest state.
She joined the CDU in 1981 as a 19-year-old student and her Catholic upbringing has shaped her more conservative views on same-sex marriage and allowing same-sex couples to adopt children.
Kramp-Karrenbauer has also spoken in favour of re-introducing one year military service.
After completing a masters in political science, worked in state-level politics.
She has been the CDU's general secretary, in charge of day-to-day political strategy, since February and was previously a popular state premier in Saarland.
Kramp-Karrenbauer has also backed traditional left-wing policies such as the minimum wage, and end to nuclear power, tackling poverty and higher taxes.
The new CDU leader lives in her hometown of Püttlingen with husband Helmut Karrenbauer.
They have been married for 34 years and he left his job as a mining engineer to look after their three sons while she pursued her political career.
Kramp-Karrenbauer now faces improving the party's political fortunes and trying to win back voters from rivals to the right and left, while working with Merkel as chancellor until Germany's next election.
She becomes only the eighth leader of the CDU since World War II and all but two of her predecessors served as chancellor.
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