Carney will take over at a tumultuous time in Canada, which is in the midst of an acrimonious trade war with longtime ally the United States under President Donald Trump and must hold a general election soon.
Carney, 59, took 86 per cent of votes cast to beat former Finance Minister Chrystia Freeland in the contest on Sunday.
"There's someone who's trying to weaken our economy," Carney said of Trump, prompting loud boos at the party gathering.
"He's attacking Canadian workers, families, and businesses. We can't let him succeed."
"This won't be business as usual," Carney said.
"We will have to do things that we haven't imagined before, at speeds we didn't think possible."
Trudeau announced in January he would step down after nearly a decade in power as his approval rating plummeted, forcing the ruling Liberal Party to run a quick contest to replace him.
"Make no mistake, this is a nation-defining moment. Democracy is not a given. Freedom is not a given. Even Canada is not a given," Trudeau said.
Carney, a political novice, argued that he was best placed to revive the party and to oversee trade negotiations with Trump, who is threatening additional tariffs that could cripple Canada's export-dependent economy.
Trudeau has imposed billions of dollars of retaliatory tariffs on the US in response to tariffs Trump levied on Canada.
"My government will keep our tariffs on until the Americans show us respect," Carney said.
Carney's win marks the first time an outsider with no real political background has become Canadian prime minister.
He has said his experience as the first person to serve as the governor of two G7 central banks - Canada and England - meant he was the best candidate to deal with Trump.
The prospect of a fresh start for the Liberal Party under Carney, combined with Trump's tariffs and his repeated taunts to annex Canada as the 51st US state, led to a remarkable revival of Liberal fortunes.
Trump's rhetoric has infuriated Canadians, who are booing the American anthem at ice hockey and basketball games.
At the start of 2025 the Liberal Party trailed by 20 or more points but is now tied with the official opposition Conservatives led by career politician Pierre Poilievre in several polls.
At a protest outside Canada's Parliament building in Ottawa on Sunday, dozens of Canadians held up signs protesting Trump with no reference to domestic politics.
"There is a rallying-around-the-flag moment that we would never have predicted a year ago," said University of British Columbia politics professor Richard Johnston.
"I think it's probably true as we speak that the Liberals have been saved from oblivion."
Polls though indicate that neither the Liberals nor the Conservatives would be able to form a majority government.
An election must be held by October 20 but Liberal Party sources said Carney will call an election in coming weeks.
Carney could legally serve as prime minister without a seat in the House of Commons but tradition dictates that he should seek to win one as soon as possible.
with dpa
27°C