With most of the votes counted, Ms Ardern’s liberal Labour Party was winning 49% of the vote compared with 27% for its main challenger, the conservative National Party.
Labour is on target to win an outright majority of seats in the parliament, something that has not happened in New Zealand since a proportional voting system was implemented 24 years ago.
Typically, parties must form alliances to govern, but this time Ms Ardern and Labour can go it alone.
In a victory speech in front of hundreds of cheering supporters in Auckland, Ms Ardern said her party had gotten more support from New Zealanders that at any time in at least 50 years.
She said: “This has not been an ordinary election, and it’s not an ordinary time.
“It’s been full of uncertainty and anxiety, and we set out to be an antidote to that.”
Ms Ardern promised not to take her new supporters for granted and to govern for all New Zealanders.
“We are living in an increasingly polarised world, a place where, more and more, people have lost the ability to see one another’s point of view,” she said.
“I think in this election, New Zealanders have shown that this is not who we are.”
A record number of voters cast early ballots in the two weeks leading up to the election.
On the campaign trail, Ms Ardern was greeted like a rock star by people who crammed into shopping malls and spilled onto streets to cheer her on and get selfies with her.
Her popularity soared earlier this year after she led a successful effort to stamp out the coronavirus.
There is currently no community spread of the virus in the nation of five million, and people are no longer required to wear masks or practise social distancing.
Ms Ardern, 40, won the top job after the 2017 election when Labour formed an alliance with two other parties.
The following year, she became only the second world leader to give birth while in office.
She became a role model for working mothers around the world, many of whom saw her as a counterpoint to US president Donald Trump.
The prime minister was also widely praised for her handling of last year’s attack on two Christchurch mosques, when a white supremacist gunned down 51 Muslim worshippers.
Ms Ardern moved quickly to pass new laws banning the deadliest types of semi-automatic weapons.
In late March this year, when only about 100 people had tested positive for Covid-19, Ms Ardern and her health officials put New Zealand into a strict lockdown with a motto of “go hard and go early”.
Thank you to all of our incredible supporters who gave us their votes. We couldn't have done it without you. Now, let's keep moving ⏩ pic.twitter.com/2hXTSsaKYe
— New Zealand Labour (@nzlabour) October 17, 2020
She shut the borders and outlined an ambitious goal of eliminating the virus entirely, rather than just trying to control its spread.
With New Zealand having the advantage of being an isolated island nation, the strategy worked.
The country eliminated community transmission for 102 days before a new cluster was discovered in August in Auckland.
Ms Ardern swiftly imposed a second lockdown in Auckland and the new outbreak faded away. The only new cases found recently have been among returning travellers, who are in quarantine.
The Auckland outbreak also prompted Ms Ardern to postpone the election by a month and helped increase the early voter turnout.
The National Party’s leader, Judith Collins, is a former lawyer.
She served as a minister when National was in power and prides herself on a blunt, no-nonsense approach, a contrast to Ms Ardern’s empathetic style.
Ms Collins, 61, was promising sweeping tax cuts in response to the economic downturn caused by the virus.
In a speech to her supporters in Auckland, Collins said she had called Ms Ardern to congratulate her.
“It is an outstanding result for the Labour Party,” Ms Collins said. “It has been a tough campaign.”
Ms Collins promised that the party would be back to fight another day.
The election also saw deputy prime minister Winston Peters and his small New Zealand First party voted out.
The libertarian ACT Party increased its support to 8% and the Green Party won 7.5% of the votes.
Labour minister David Parker said it was a landslide win for his party.
“It’s a tremendous accolade first and foremost to the prime minister, but also to the wider Labour team and the Labour movement,” he said.
In the election, voters also had a say on two contentious social issues – whether to legalise marijuana and euthanasia.
Polls taken before the election indicated the euthanasia referendum was likely to pass while the outcome of the marijuana vote remained uncertain.
The results of both referendums will be announced on October 30.
