With about 83 percent of the vote counted, Handel was ahead 52.6 percent to 47.4 percent against Democratic challenger Jon Ossoff, prompting CNN and NBC News to call the race in Handel's favor.
Her victory will be cast as a win for Trump, who campaigned for Handel and hurled a string of antagonizing tweets at Ossoff.
The Palmetto State race received little national attention or money compared to Georgia or other special elections, but the narrow win compared to the 19 points Trump won the district by in November is a major swing.
However, it was Trump's collapse - besting Hillary Clinton by just 1.5 points in the district in 2016 - that led Democrats to believe it could be in play.
Republicans also held onto the House seat in SC vacated by White House budget director Mick Mulvaney. The Palmetto State district hasn't seen the erosion of support for Trump that Georgia's 6th did last November though, and Republican state Rep. Ralph Norman is expected to beat Democrat Archie Parnell, a former tax attorney and financial adviser.
It was enough to help Handel raise more than $5 million, not a paltry sum in a congressional race, but barely a fifth of Ossoff's fundraising haul.
Her win comes after losing bids for governor in 2010 and the Senate in 2014, and it builds on a business and political career she built after leaving an abusive home as a teenager.
Everyone knew the Democratic base was ginned up beyond belief at the chance to send Trump a message about his performance in the first 150 days of his administration.
Polls closed Tuesday at 7:00 p.m. ET after a record-high early-vote turnout, and strategists say it is likely Tuesday's turnout will surpass previous records as well. It could also show House incumbents that they can separate themselves from Trump effectively on the campaign trail, and stave off a potential wave of retirements. After Ossoff almost took the district outright in its April primary, outside super PACs quickly stepped in to back up Handel.
If Handel were to win, Republicans on Capitol Hill could feel they are on the right track - helping the GOP's push for health care and tax reform legislation.
The national implications, however, will dominate the story coming out of this race.
Republican candidate Karen Handel addresses supporters.
A little-known political action committee unveiled a last-minute ad trying to link Ossoff to the shooting of a Republican House leader and others at a GOP congressional baseball team practice last week outside Washington. Ossoff grew up in the district but now lives just outside the border near Emory University, while his fiancee finishes medical school.
"He wishes he could vote like me, because he doesn't live in the district", Handel said, according to the Hill. "I've lived here for almost 25 years and I think that's going to make a big difference to the voters in this district".
Handel also never fully embraced or distanced herself from Trump. She thanked the president in her victory remarks on Tuesday night, getting loud cheers from her supporters. Outside money from Super PACs and the National Republican Congressional Committee total at about $18.2 million in support of Handel, according to the Center for Responsive Politics.
The Georgia special election result could be consequential for the fate of the GOP's Obamacare replacement bill, the American Health Care Act.