The South Korean candidate was selected by the International Olympic Committee in the first round of voting ahead of Munich in Germany and Annecy in France.
Pyeongchang received 63 of the Committee's 95 votes, well ahead of Munich's 25 and Annecy's seven.
It is a case of third time lucky for Pyeongchang, which lost to Vancouver and Sochi respectively for the right to host the 2010 and 2014 Winter Games.
"This is one of the happiest days for our country, our people and millions of youth[s] dreaming of winter sport," said Pyeongchang bid chief Cho Yang-ho.
People were out on the streets in the early hours of the morning to hear the announcement. After two failed bids and a decade of waiting, the celebrations they've bottled up for years were expressed with concerts and fireworks. The opportunity to develop a new market for the Winter Games in Asia was seen as the real jewel of this presentation. Korea promised access to some 600 million young Asians, and the chance to develop a new culture of winter sports here. Only Japan has hosted the Winter Games before, and it's only the third time the Games have been held in Asia. South Korea's president said earlier this week he saw it as "his duty" to bring the Games back for Asia. Tonight, for many Koreans, it just feels like pleasure. Lucy Williamson, BBC News, Seoul
Pyeongchang, which has a population of 47,000 and is situated near South Korea's east coast, says it can spread the Olympics to a lucrative new market in Asia and become a hub for winter sports in the region.
The Winter Games have twice before been held in Asia, both times in Japan - Sapporo in 1972 and Nagano in 1998.
The result is a personal success for South Korean president Lee Myung-Bak, who was a key figure in Wednesday's final presentation to the IOC and had declared it "his duty and his mission to deliver the Games to Asia".
When IOC President Jacques Rogge delivered the decision, Lee celebrated with his fellow delegates, including reigning Olympic figure skating champion Kim Yu-na.
"I will make a good Olympics," declared 69-year-old Lee. "This is a victory for the Koreans, thank you to them."
In a statement, the British Olympic Association offered their congratulations to Pyeongchang.
"As the first Asian city outside of Japan to host the winter Games, Pyeongchang will bring the excitement of the winter Olympics to a new audience. We look forward to what we are sure will be excellently organised Games that make Asia and the Olympic Movement proud," said BOA chairman Colin Moynihan.
In an emotional presentation on Wednesday, Pyeongchang hammered home the message that South Korea has shown its determination time and again after twice missing out and had improved after listening to the advice of the IOC.
Munich sought to counter Pyeongchang's emotional pull, with Thomas Bach, an IOC vice president and a senior leader of Munich's bid, noting that Germany was making its fourth Winter or Summer Olympics bid in recent years and that it has been more than 70 years since the country hosted the Winter Games in Garmisch-Partenkirchen in 1936.
Outsiders Annecy were never able to gain enough momentum to mount a serious challenge, despite their calls for an "authentic" ecologically-friendly games in the heart of the French Alps.
This was the first time an Olympic bid race with more than two finalists was decided in the first round since 1995, when Salt Lake City defeated three others to secure the 2002 Winter Games.
IOC president Jacques Rogge admitted he was surprised that the vote was concluded in the first round, but said: "the best one [bid] has won convincingly".
"I think that there is maybe a lesson in the achievement of Pyeongchang. It's that patience and perseverance have prevailed," he added.
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