Muhterem Aras, a Green Party politician, took the post in Baden-Württemberg from a member of a populist anti-immigration party on Wednesday.
"We wrote history today,” she said after sweeping in with a significant majority.
Ms Aras, 50, said her victory sent a message of "openness, tolerance and successful integration”, The Local reported.
Born in Turkey, she moved to a town near Stuttgart with her parents as a child and studied economics before founding her own tax advice firm.
Her political career started in 1992, standing for the Greens on the local council and rising through the local party to become its local leader and enter the Baden-Württemberg state parliament.
She was elected as "Landtagspräsident” by 96 local MPs, becoming the first Muslim woman to take the office.
The election came amid continuing tensions over religion, immigration and extremism in Germany.
Source: Independent